Good morning. My name is Kelly and I will be your conference operator today. At this time, I would like to welcome everyone to the Greif's Fourth Quarter and Fiscal 2017 Earnings Conference Call. [Operator Instructions] Matt Eichmann, you may begin your conference.

Thank you, Kelly, good morning everyone. Welcome to Greif's fourth quarter and fiscal 2017 earnings conference Call. Joining us on the call today are Pete Watson, Greif's President and Chief Executive Officer; and Larry Hilsheimer, Greif's Chief Financial Officer. Pete and Larry will be available to answer questions at the end of today's call. In accordance with regulation of fair disclosure, I encourage you to ask questions regarding issues you consider material because we are prohibited from discussing significant non-public items with you on an individual basis. Please limit yourself to one question and one follow-up question before returning to the queue to allow others to ask the question. 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 will be referencing certain non-GAAP financial measures and reconciliation to the most directly comparable GAAP metrics as contained in the appendix of today's presentation. And now, I turn the presentation over to Pete on Slide 3.

Thank you, Matt, and good morning, everyone, and welcome to our call. Our fourth quarter of fiscal year 2017 performance reflect sustained improvement across our entire portfolio. Net sales for the fourth quarter and fiscal 2017 were $968 million and $3.6 billion up 12%, 9% respectively versus prior year. Strong quarterly sales benefited from strategic pricing decisions, higher selling prices, and stronger volumes in most of our businesses. Fourth quarter and fiscal 2017 operating profit before special items grew to $89 million and $335 million up 2% and 9% respectively versus the prior year. Fourth quarter operating profit before special items benefited from year-over-year reduction in SG&A expense and was negatively impacted by more than $5 million headwind related to Hurricane Harvey and its resulting downstream effects to the supply chain. Fourth quarter and fiscal 2017 Class A earnings-per-share before special items grew to $0.98 per share and $2.95 per share up 51% and 21% respectively versus prior year. Earnings grew due to the higher year-over-year operating profit, lower interest expense, and significant lower tax expense that Larry Hilsheimer will discuss in greater detail in a moment. Finally fourth quarter and fiscal year 2017 free cash flow grew to $168 million and $208 million up 47% and 4% respectively versus the prior year. Please turn to Slide 4. We're making steady progress toward achieving our vision of customer service excellence. Each of our businesses reported customer satisfaction index improvements versus the prior year quarter and we made notable gains over the last several years. Going forward, our expectation is that each of our segments operate with a customer satisfaction index level of 95% or greater. We believe unparalleled levels of service will differentiate us in the market. Please turn to Slide 5. Before I briefly review Greif's performance by segment,…

Thank you, Pete, good morning everyone. Please turn to Slide 10 to review our fourth quarter financial results. Before I get into more detail on the quarter, I would like to take it up a level first. There's clearly some noise in the results in the quarter however big picture we delivered outstanding free cash flow, significantly lowered our tax rate burden, and we reduced our financing costs while overcoming a price cost squeeze in our paper business. We believe we are extremely well positioned for 2018. Onto the quarter specifics, net sales excluding divestitures and foreign exchange were 10% higher year-over-year due to strategic pricing decisions, index price changes and volume improvements in most parts of the business. Fourth quarter consolidated gross profit was flat to the year ago quarter as a result of higher raw material prices and the timing of contractual pass-through provisions in Rigid's, a $3.6 million inventory adjustments in the Rigid's business discovered during efforts to improve our supply chain efficiency through centralized inventory management with the cost of relocating excess inventory outweighing its benefit. A $2.7 million accrual and flexibles related to legacy claims and a $5.3 million headwind related to adverse weather conditions that impacted multiple parts of the businesses. These items should not repeat. Recall that we initially estimated a $2.5 million hurricane headwind when we reported Q3 results on August 30. However that initial estimate was made just days after Harvey hit Houston and was too conservative. Specifically, Rigid experienced a $4.4 million headwind related to unplanned customer outages, paper experienced a $0.5 million headwind related to higher transportation costs related to trucking availability challenges and our land business was negatively impacted by $400,000 as a result of flooded timber stands. The lesser extent our caps and closures business also suffered…

Thank you, Larry and please turn to the final slide to give you a few brief closing comments. Greif possesses leading product shares in a well diversified global portfolio that is not easily replicated. Our customer centric philosophy and sharp focus in operating fundamentals will drive stronger financial performance. We're committed to continuous improvement and acknowledge we can always get better as a business. As we move into fiscal 2018, we'll remain focused on executing our strategic priorities that will create greater value for our customers and our shareholders. Thank you for participating this morning, we appreciate your interest in Greif. Kelly, please open the line for questions.

[Operator Instructions] Our first question comes from Ghansham Panjabi from R.W. Baird. Please go ahead.

So first off, if you adjust for the hurricane impact and also the inventory charge in RIPS, did operating profit for that segment come in where you thought it would for the quarter? Or it was price cost or mix worse than you perhaps initially thought?

I would say, Ghansham, it came in slightly lower, but not very much. I mean if you combine those two items you end up picking up about 2.2% on - I'm sorry, you pick up between the hurricane and write-down to pick up about 1.1% on just the margin decrement that has to do with the costs rising and the relative price increase from years another 1.1%. That makes up 2.2% of the margin percentage gap. The other items that drove it down, there are just not as many opportunistic by opportunities and then just the timing of these fast group provisions are really the drivers. We also had some resin price spike in Europe that was not anticipated that impacted margin slightly. So I'd say slightly lower than we anticipated, Ghansham.

And then just as my second question, can you give us a better sense of your outlook for volumes for industrial packaging for 2018. What's embedded in guidance? And for the company as a whole can you also sort of help us bridge the EBITDA improvement on a year-over-year basis between the two years? Thanks so much.

Yes, Ghansham, let me talk about the volume assumptions we see in 2018 and some of the rationale for that and I’ll let Larry address the second question. So if you look at our Rigid Industrial Packaging business globally, we’ve got assumptions of 3% growth in steel. The big factor is weighted toward better more positive environment in our [end use] [ph] segments in North America because of all planned expansions in the chemical industry and their advantaged position as a low-cost chemical producer. We also have capacity expansions in that sector in Russia, and so we see that we’ll perform at 3% which is little bit higher than what we see global growth in the chemical business. IBCs, we are assuming 15% growth in IBCs, that is predominantly centered around capital expansions we have in North America and EMEA. We’ve got several build-outs of new IBC structures there. Plastics, we are assuming a 3% to 4% growth at our plastic drums both large and small plastic drums. The predominant growth again is in North America where I think we have an advantaged macroeconomic market and then also APAC where we have broadened our portfolio and running small plastic products. In paper packaging we see 2% to 3% assumption of growth, larger growth in the second half. That is a little less than what we have traditionally done, performed, and that relates to, we have accelerated our volumes to our capacities. And so our challenge in critical importance is we have to build out more capacity, more opportunities downstream in our converting operations. We said strategically having greater degrees of vertical integration is important and that will be a big play for us going forward 2018 beyond. And in FPS we see a 4% to 5% growth both in the one and two loop products, and the four loop products. The majority of that growth will be in North America where quite frankly we have commercially underperformed and we think there's nice opportunity there that we’re starting to benefit from. And then we've expanded our operations in APAC which is our best-performing business in FPS. So that’s our volume assumptions we have in 2018. And I'll ask Larry to comment on the bridge from this year to 2018 on our budget.

Ghansham, basically across our Rigid business as a whole we’re anticipating gross profit improvement of roughly just shy of 8%. In PPS, our assumption is no further price increases except maybe discrete things in some of our specialty products are actually what's in our budget for PPS relative to OCC is a 113 index in November, December. For our earnings guidance budget we actually have it at 160 in January through the remainder of the year. It blends to like 152 a ton over the entire year. When we put that budget together we were sort of thinking that maybe things spike up in January. It's looking like maybe that will be delayed, but we didn't change it because we also don't know, jeez, does it spike up more than 160. So we just left it as it was. So to restate, 113 a ton in November and December, 160 the rest of the year and pricing fairly stable, that amounts to about $20 million or $21 million roughly increased in PPS's gross margin. That’s another 6% or so - excuse me, in FPS in the gross margin area, pretty much flat in land. If you go to SG&A, we’re anticipating SG&A is going to go up for a couple of reasons. Although on a percentage basis staying relatively flat because the increase in sales, but we had a roughly $5 million good guy in above the line taxes in Latin America related to some things that went back into the 1990s that finally got settled in some Brazilian courts this year. That $5 million item won't repeat. So that would be equivalent to an increase. We got depreciation beginning at a higher level on some of our enterprise system implementation is going to be another roughly $5 million. And salaries, because we’ve got our headcount relatively stable to where it’s going to be for short time. So that’s a 12 million increase. And then we have some increases anticipated in some of the incentive payouts related to just the longer-term incentive element to reflect some of the improvement we drove through the transformation process. So roughly all in, we’re anticipating that our SG&A cost to be up somewhere between $15 million to $25 million roughly. So hopefully that gives you the elements well enough to do your walk on EBITDA.

Our next question comes from Chris Manuel from Wells Fargo. Please go ahead.

Good morning gentlemen and congratulations on a lot of progress here over the past couple of years getting the business in a much better shape. Couple of questions. First, when I look at for where you sit today having the business in better shape, that kind of sets up when we start. Your leverage is less than 1.9 times. You talk about target being 2 to 2.5. Help us with where we go from here. So I know you got a slide here that shows, I think in Slide 12, how does the acquisition pipeline look? What’s the thought process there? And then I really wanted to kind of focus on point four where you talk about capital return to shareholders. So absent such acquisition as well it sounds like either more dividends or repurchase or how you think about that over the next 12 months?

Yes Chris, let me comment just on some numbers first, then I’ll turn over to Pete that maybe talk about where we are on M&A side. As you know our first quarter generally debt level will go up as relative to - there’s little bit of cyclicality in our business. So, we’re watching, see where things go in one. We’re confident we’re going to have a good first quarter. And then we’ll be re-examining what actions do we take depending on where we are at in both potential M&A transactions if any. And also as I mentioned if we identify other CapEx projects that we believe are highly desirable. So I would say probably more likely to hear something from us in not first quarter call unless something comes up in the M&A side, but more in the second quarter time to timeframe about plans.

And Chris, just to reiterate, so we’ve got two paths to growing as it relates to capital allocation, as we said we have got capital expansion plans in our core businesses. In IBCs production increases in capabilities and strategic market, and in plastic operations as well, and paper packaging increases our integration, those who have been communicated and we’re in the process of executing. I think by mid this year. We will start seeing some evidence of that. Going forward, we’ll follow the process that’s going to be a blend of strategic capital expansions reliant to the core businesses we talked about both in paper packaging and Rigid and also acquisitive opportunities within our core. So we’re following the process, we’re very active in how we’re pursuing that process and we’re excited about the opportunities for the future of Greif and how we’re going to write the next chapter of Greif for the next three or five years.

My follow up question, Larry on the working capital side, I think I heard you say you were about $31 million use this year and I think I heard you say something in the - and $30 million used again next year, those sounded like pretty big numbers given we’re seeing some release in some of the raw material stuffs, I know you have a little bit of growth in there but that sounded maybe a little bit of color to that, it sounded a little bit maybe conservative or how do you think about that?

That’s probably fair, Chris. I mean maybe a little gun shy because of how rapid the raw material price went up this year. Clearly if we didn’t see any raw material cost increase over year, we would want to hold ourselves to higher expectations because we will continue to focus on reducing our cycle and our days in receivables relative to sale, our percentage to sales. So yes maybe a little conservatism in there, I mean Pete and I sort of got burden this year on saying we would be flat and then raw has increased pretty dramatically. But clearly with sales going up somewhat there could be some pressure on working capital. But I think your comment is fair.

[Operator Instructions] Our next question comes from Adam Josephson from KeyBanc. Please go ahead.

Larry just a couple of tax questions for you, I know if we go back to the Analyst Day in June, you’re talking about implementing these tax planning strategies right, so when you gave guidance last quarter, I think you guided to about 35%, 36% tax rate, you’re aware of whatever these tax planning strategies were there, you were implementing and despite that the tax rate was obviously called a third of what you’re expecting, so I guess just help me understand how the tax rate was so dramatically lower than what you thought it would be just three months ago and also similarly you incurred these additional tax planning costs that you called out, what was that related to?

So just to be clear, we don’t give quarterly effective tax rate guidance, so we didn’t like to 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 external help and really rallied the troops internally to gather all the information and work extremely hard and diligent to get things executed by year end that we could potentially accomplish 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, inter-company arrangements all of the stuff that had to be done on restructuring internal boards, the massive amount that had to get done is really enormous. So what they accomplished, I couldn’t be more pleased, and 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 we’ll continue to drive benefits every year from now on, I’m thrilled and I can’t - I wish I would have had a better crystal ball to be able to tell everybody that 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.

And your booked taxes in fiscal '17 were $67 million, I know you haven’t followed your K but can you tell us what your cash taxes were in fiscal ’17 perhaps compared with what you thought they would be in and to what extent that boosted your free cash flow and then what was your cash tax rate for the year?

I don’t have the cash tax rate, what I can tell you Adam is that our cash taxes improved because we decided obviously not to pay payments that we didn’t think we make, so went down about roughly $20 million.

From fiscal '16 you mean?

From where we anticipated it to be for ’17 when we had the guidance Q3 and I think it’s roughly the same year-over-year improvement.

So that was part of why free cash was higher than what you had, so the lower CapEx and the lower taxes?

Yes, I mean it all the things combined but we still would have been very close to the bottom end of our range even without that and so I’m obviously very pleased with our free cash flow generation anyway you look at it.

Our next question comes from George Staphos from Bank of America. Please go ahead.

I wanted to take a different approach to what you're ultimately getting with Ghansham's question, so if I take your guidance on slide I guess 11 on some of those factors and what you said here today and obviously the EPS guidance, should we expect EBIT guidance basically to be somewhere - I don’t know call it 350 to 370 range and EBITDA maybe in the 475 range, anything that we're missing in terms of that calculus we had talked about in our note yesterday?

You said 350 to 370 on…

Yes, I’m giving you a range there but roughly around 350 in EBIT roughly around 475 with EBITDA considering that D&A has grown up around $5 million as well.

Probably in that range maybe a little low on EBITDA.

Meaning the number I presented was a little low, so would be higher than that?

Yes, slightly up.

And one other sort of knit type of question, I will turn over and come back. Couple of things here, the 14 somewhat million impairment actually closed your $15 million, was that largely Brazil, the $5 million tax good guide that you’re mentioning earlier did that in the fourth quarter or was that earlier in the year and in which segment was that and what was the OCC benefit in the quarter? Thank you, guys.

So the goodwill thing was primarily Brazil that was the vast, vast majority of everything. Most of that SG&A is one-time benefit in Latin America came in some of it minor amount was in the third quarter and then the OCC benefit in the fourth quarter.

About 2 million bucks.

$2 million.

Our next question comes from Justin Bergner from Gabelli & Company. Please go ahead.

I just wanted to make sure, I understood two quick one-offs. So you’re seeing 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?

Yes, and to be clear Justin that’s not in the tax line primarily there is an element in the tax line but we are talking about was a tax that flow through SG&A because it was bad type of tax.

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 $3.6 million inventory write-down and the majority of it related to inventories that were identified as we’ve looked to centralize and manage our supply - manage our supply chain more efficiently by centralizing warehousing in some of our businesses and often times when you’re doing that you look at do 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 efficiency gains.

Okay. But that was removed from the adjusted results?

No.

That was in the adjusted results? Okay. And then 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 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 sort of 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 related to a volume assumptions. So there is obviously pretty positive global growth, there is very low macroeconomic volatility and access to credit is very favorable. Our business in Rigid Industrial packaging is very focused to the chemical specialty chemical and those related end-used markets. Some of the big growth macro-economically 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 two to three years, it also includes we have capital expansion that we have implemented this year and will be implementing next year by mid-year. And so the IBC growth and some of the steel drum growth is indicative of 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 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 is a direct relation to their performance in customer service or they’ve gone from a 60% rate to a 90% rate and you can see their improvement in profits track to that trend. So that’s hope that answers your question Justin, if you have any other further issues you wanted to delve into please let me know?

Yes just a quick follow-up I mean, do you know how much volume was impacted in Rigid's in the fourth quarter by the hurricane because the step-up sort of 1.8% in the strong sort of global IP environment 3% to 4% still seems little difficult to bridge?

Yes so if you look in North America and the Gulf Coast, 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 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, Latin America is fairly good growth strength in all of the substrates and again I 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 discipline in how we price and manage our product mix in that business and actually feel very comfortable in the capabilities and discipline that we've put in that business in the last two years.

Our next question comes from Ketan Mamtora from BMO Capital Markets. Please go ahead.

So first question on M&A. What areas of businesses do you find most interesting at this point and are you more focused on more bolt-on type acquisitions or perhaps larger acquisitions or are you size agnostic at this point?

In Investor Day we really set our concentration on gross 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 the capital expansion with committed customers but it's a blend acquisitive and capital expansion. We are not afraid to do any big acquisition but if we do it will be inside or clearly defined core that we talked about at Investor Day and we are pursuing those initiatives and we're pretty active in the process and will 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 and how we approach it and again stay within our core.

And then my follow-up question, on the other options that you might have both returning cash to shareholders Larry you think about just regular dividend versus share repurchases versus let’s say special dividends and do you have, sorry if you said perhaps in the second quarter you might have more to say on this, but do you think about it let's say on a leverage basis A, if you get to 1.5 times and absent any M&A you might think about returning cash to shareholders. Just give us at a high level how you think about it.

We've been talking about this - I'd just repeat what I've said is, at the point that we determined 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. So 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 decide to do something that way or but it could well be stock repurchase or special dividend, we don't know at this point and will examine it at the time we decide to make such a return of capital to shareholders.

[Operator Instructions] Our next question comes from Dan Jacome from Sidoti & Company. Please go ahead.

Just two quick questions, can you give us a little more flavor of the progress you're making with the triple wall board expansion at Kentucky. What did you learn or do differently this quarter versus 3Q and then my second question was on just IDC. You know you're putting a lot of capital to work in there which I think is encouraging but it's hard to get industry data on that part of the industry. Just give us a sense please of what's demand - underlying demand is right now and looking to 2018 and how much capacity in the entire marketplace is coming online. I’m just trying to understand supply demand characteristics a little better there, that's it.

So your first question on the bulk packaging growth in our Louisville Kentucky operations, 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 are positioned well based on customer service and speed to market and quality. I have very, very positive comments from prospective customers to fill that gap in capacity. In regard to IBCs because the two major other suppliers are privately held companies, you'd 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 rates. The two largest markets, the major markets are EMEA, North American 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 in desperate regions and we are in the process - 2018 will be an execution element to that growth.

Is that capacity - it was a Greenfield opportunities or is that - do you know what I mean is it, new machines how you’re saying.

It's all Greenfield capacities 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 will be more capital build-outs as it relates to our customers needs and requirements.

Our next question comes from Adam Josephson from KeyBanc. Please go ahead.

Thanks Pete and Larry for taking just two follow-ups, one on OCC and one on the reconditioning business. Just on OCC obviously you're still assuming a huge spike in January which may or may not happen – obviously OCC inventories here were quite high so that may well not happen. If indeed OCC stays very well and much lower than what you guided - what you've assume for the year, what impact if any do you expect that to have on your containerboard prices and what do you think is the relationship between containerboard prices and OCC particularly given that earlier this year many companies raise prices based on higher OCC costs.

Adam, so couple of things, so when we did our budget in the guidance we have in the timing of the layered in of inflation or prices in OCC was what Larry stated. So the timing maybe different and I think we all agree, we probably won't see an increase in OCC to maybe February but here regardless the blended rate we have of $152 a ton and that step offers are 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 - 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.

But in terms of the relationship between prices and costs in that business, what do you think it is?

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 two 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 to what drives market pricing I think it's a combination of two but I think demand is the biggest factor in my opinion.

And just on the reconditioning business obviously the Milwaukee Journal had written several articles on the situation with some of your reconditioning facilities, the EPA has issued a notice of violation related to three of those facilities, so can you just update us on what's going on with your reconditioning business and what if any potential liability you're expecting as a result? Thank you.

So I'll make 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 and we have an excellent track record in both safety and environmental compliance, I think I said the 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 nine month process since it originally came out and during that nine 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. That federal state 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 situations become highly politicized. And I think that's the result is a nine month delay and when it started so when we got the notices. So in regard to what we are doing with the notices a significant portion of those notices apply the 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 rule making process. On the other point 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’re very, very confident that our current financial disclosures fully comply with all SEC requirements.

Our last question comes from George Staphos from Bank of America. Please go ahead.

Thank you very much. My two questions first Pete to extent that you can comment on pricing and the comparisons within RIPS looking forward, I reckon I don't like to get too forward in pricing for obvious reasons but at some point, we would expect the comparison to get a bit more difficult given you've been on this value or volume pricing initiatives for a while. When would you have us think about the comparison to getting maybe a bit more challenging in terms of affecting higher pricing specifically again within RIPS at the level of detail that we would see from financials that you had report and I had a follow on regarding reconditioning?

No that's good thanks George. 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 four but in last raw material markets remain as we project them to remain, we see recovery and not more normalization of that 20, 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 2016 to 2017 to our guidance in 2018 you see that trajectory of our strategy of value and margin over volume. I think there will be times when we have higher margins because of market conditions as rate to raw materials, and I think there will be conditions like we saw in the last four months when we have margin squeeze and I will tell you how we view our business as 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 a 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 four 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 onstream 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. Also 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 improvement, so again I think it's a combination of how we go to market and how we operate our businesses. But I’ll say there's not many low hanging fruit in our business now, so this is grinded-out journey, win customers through excellence in customer service and compete in all the markets we face.

That last comment more or less answered the question in the way I was going with it initially, thank you for that. The other question I had just on reconditioning, is there a way that you could one comment on what allegations you think are incorrect? Perhaps you can, perhaps you can't and I would understand why given the forum. Secondly to the extent that you stated that the regulators are perhaps coming in with policy or standard that hadn’t been used previously, if that was applied to the rest of your reconditioning business would you have additional investment or process change that would be required and in total I know it's hard to talk about this but is there a way for us to understand what this might mean from a either expense level, if there are any processes that need to be changed or any sort of capital or liability amount that you would have us sort of think about in the back from mind as you ultimately wrapped up this process? Thank you guys and good luck in the quarter. I know that was a lot, sure.

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 and that's public knowledge. Some of the regulations you had indicated that have not been applied previously to reconditioning facilities and what that may mean, so it's important for everybody, the regulatory, 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 at 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 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 would tell you is any capital or cost that may or may not incur would not be significant to our overall company and again we're very, very comfortable with the disclosures to SEC requirements.

There are no further questions at this time. I will now turn the call back to Matt Eichmann for closing remarks.

Thanks a lot Kelly. Thank you everyone for joining us this morning. We appreciate your time and have a good holiday season ahead.