Sealed Air Corporation (SEE) Earnings Call Transcript & Summary

I'm Anthony Pettinari from Citi. And we're very pleased to host Chris Stephens, CFO of Sealed Air. We also have Lori Chaitman, VP of IR. Chris, we wanted to take this opportunity to really do a little bit of a deep dive on Sealed Air's automation capabilities, which I think were highlighted on the last call, but we wanted to dig a little bit deeper. So Chris, thank you for taking the time. Good to see you.

Great to see you, Anthony. Thanks.

And maybe we can kick off, it might be helpful for the folks here, if you can just kind of give an overview of Sealed Air's automation capabilities, sort of the core offerings. And then maybe talk a little bit about how they compare versus the rest of the business or company-wide average from a margin perspective, growth perspective, returns perspective.

Sure. Great, Anthony. Thank you. And good. Thank you for having us. I definitely prefer to be sitting right next to Anthony, I saw that empty chair as we kind of get started here. I thought what the heck, I should be sitting right next to him. But we're glad to join you as well as others virtually. So thank you for your interest in Sealed Air. And maybe before I dive into the automation piece, just kind of coming off of last year's results of 2021, we had very strong growth in terms of our organic growth, we saw 12% growth last year, half of which coming from volume, half of which coming from price. This in a heavy inflationary environment, not only on the material side, but just in general, and the pricing that we've got in the system, if you will, in terms of the pricing activities as we call pricing with care because we want to make sure we recognize the challenges our customers have and things that we can do to make their operations more efficient, more effective, take people out of harm's way, if you will, less touch points, which kind of gets into the automation story. So coming off a very strong year from 2021, being able to set out some guidance that we feel is good commensurate kind of continue into 2022. And I encourage the investors and others that are interested on us on this call is please refer to our website and take a look at our presentation, if you will, our supplemental presentation that went along with our Q4 full year results because you'll provide -- it will provide a little bit more color, things that I'm going to talk about, as Anthony and I discussed just kind of heading into this webcast and it is around automation. So let me maybe talk about the -- I called it a little bit of a transition. The focus on automation for us is there's value -- tremendous value that we can bring to our customers through automation and all of that comes around that bundle of opportunity. The company was successful a few years ago, buying a company called APS, Automation Production Systems. And that acquisition, coupled with other offerings that we have on the equipment side allows us to get into our customers' operations and literally just do that. I mean how do we drive productivity in their operations. So when they make the investment in automation and the equipment that we can offer, the opportunities we have to have what we call the multiplier effect around that is not only the service side of the equation, but also the integration with their operations. And of course, we have the material pull-through. So we did a deep dive on the fourth quarter call. Specifically Ted, identified 3 or 4 charts that we kind of spoke to the multiplier effect. We spoke to how we are changing the game with automation in terms of an offering. It represents less than -- roughly less than 10%, 8% of our sales in automation, when our heavy focus on growing that over time is where we're spending a good deal of time. So having that an initial investment with automation and then helping drive productivity in our customers' operations has been the focus. And it's the multiplier effect, which I talked about, but it's also the profitability around automation. And we're improving the EBITDA margin profile. We don't disclose that publicly, but I can tell you it's not the old kind of way of looking at providing the automation to get the materials pull through, it's both. It's making sure we got value in terms of the equipment that we sell. And then along with that comes the service side, the integration of that equipment into our customers' operations and the material pull-through that we benefit from. That's very much a part of our core.

Great. Great. And can you talk a little bit more about some of the maybe broader financial targets around the Sealed Air operating model, whether it's cash conversion, margin improvement, incremental margins?

Sure. So I'm going to actually -- I know we're not presenting slides, but I actually comment on Slide 7, which is a part of our fourth quarter full year deck last week. And on Slide 7, what we're showing for the first time in a little bit more detail, I shouldn't say the first time, but in more detail is what we're considering the SEE Automation kind of operating model, which I want to get to the company operating model eventually during our dialogue here, but specifically around automation. We came off a year of selling $449 million last year in that specific space. Again, thinking through the equipment systems and service side of that. We're targeting '22 to be greater than $500 million, so a double-digit growth heading into this year, 2022. And if you profile that out to 2025, organically, we expect to do better than $750 million. We're also highlighting that it gets into a little bit of the capital deployment priorities. We're highlighting the M&A opportunities, again, building off the APS acquisition is how can we bring another equipment company into the fold for us to further leverage that top end and then get into that multiplier effect. So we're profiling out our 2025 estimates of greater than $750 million organically and potentially over $1 billion with M&A. And along with that, identifying the, I'll call it, the savings realized by our customers as a result of that investment and we're seeing that in real time. So we actually shared an example with investors on our call in showcasing how we're wrapping around their operations, the different automation equipment that we provide that drives those productivity savings. Specifically, we talk about Auto Box, Autobag, Auto Food, which has multiple pieces of equipment in there. And since the pandemic hit, we're growing greater than 50% over that time frame in terms of our bookings trends. And the bookings trend has been favorable, greater than 1x if we will the book-to-bill ratio, and we see that continuing into this year. And that's what you'll see profile. And you'll see that how we're trying to digitally connect over 100,000 pieces of equipment that we know are in our customers' base. Making sure we've got a good inventory that digitize that, make sure we've digitally are connected to what they have in their operations. And then you mentioned the profitability. We don't disclose EBITDA margins, if you will, at the automation level. But I can tell you the improvements we've made, both in the food and protective side on that focus on making a good amount of margin on the value we're selling for equipment hasn't proved and allowed us to be able to guide approximately 21% EBITDA margin for 2022.

And Chris, I mean, you touched on this, but I just want to make sure that we understand. In terms of the relationship between the machinery and the consumables, kind of how are you doing things now versus maybe how you were doing things 5 years ago or in terms of the philosophy?

Sure. Good question. I guess it's if you just split the 2 transactions and sometimes they are bundled together contractually. But when you separate the 2 for purposes of driving value is let's make sure that we are making good margin on the investments we're making in that business. And I get to -- I use -- we use APS kind of as that go-to model because that's mostly on the equipment side, thinking about how they do it within our operations and then branching that across the rest of the company. So really taking best practices throughout our company as it relates to equipment, equipment we buy, equipment we source and manufacture within our own operations. And again, just tracking that profitability. So it's not a matter of providing it or giving it away, if you will, getting the materials flow through, it's driving that value, as I mentioned before, on the equipment sale. And then separately, sometimes they're combined, but separately, you can have a materials contract or a service contract that goes along with that equipment. And I guess just consciously, we're recognizing we've got value to bring in the equipment we sell, let's make sure we're capturing our fair share of that value.

Great. And you have the goals that you've articulated. And as we think about sort of the goal to '25. You've got a food business, you've got a protective business, what part of the business is maybe driving a disproportionate amount of that growth between the 2 segments? And then when we think about end markets, are there end markets that are really kind of driving this change and others that are maybe lagging or opportunities going forward?

Sure. Maybe that's a good segue in to -- I'll talk about our operating model, which is a little bit more of the longer-term financial objectives that we see based on the markets that we serve. And then I'll talk specifically about 2022, as we shared with investors last week on our earnings call. And specifically to the operating model, what we mentioned in the past is we typically would grow over time, 3% to 5%. We actually bumped that up to 5% to 7%, coming off a favorable 6% organic growth last year, and I'll get to what the drivers are in terms of why we made that change. And then on the bottom line from an EBITDA margin, instead of 5% to 7%, drive this 7% to 9%. So generating 20-plus percent EBITDA margin business over time, still trying to drive a double-digit EPS growth over time as well as get to a cash conversion greater than 50%. Maybe specific to the question of why changing that model now? The confidence is multiple folds, if you will. There are several pieces of that business, but I'd say the big push is on the automation side, the multiplier effect. We've got other great capability as it relates to the digital piece, which is in early stages. And then you get to the sustainability, which drives us. I mean it's kind of how are we contributing and our -- and how we can to the sustainability goals that have been laid out as well as thinking about the environmental side of it. So those are the volume drivers, those 3 areas for purposes of driving that volume. And collectively, we feel more confident in driving a 5% to 7% top line growth over time recognizing that you've got the price benefits of that as we increase the value we bring to our customers and the margin profile that we know that we can realize for our investors.

Great. Great. And here at the conference, I mean, the CEOs and CFOs have had a conversation about underlying demand and then they've had a conversation about being able to meet that demand. And I'm wondering, as you look back at '21 and you think about '22, can you talk about your ability to meet demand maybe broadly company-wide and then maybe specifically on automation?

Sure. Okay. And then what we also provide investors every quarter we speak to them on our calls, is talk a little bit about our outlook for that current period or in this case, we just put out 2022 guidance and we talk about outlook range. And what's on the positive side of that range versus what are you a little bit concerned about. So maybe kind of let me break them down. And it first starts on the positive is just that strength in the equipment and system sales side of it. There is an element of demand being greater than our ability to supply right now twofold. One is capacity because that's a good news story. We've got it started early last year, making incremental, tens of millions of dollars of incremental investment to expand the capacity in our operations to be able to satisfy that demand on the equipment side. I wouldn't necessarily say lost sales, if you will, because that shift for customers is they recognize the power of what we're able to bring to them and the benefits. So it's just a matter of satisfying that demand. There has been a little bit on the supply chain challenges in terms of getting the component parts into our operations to finalize that equipment. But I don't want to overemphasize that, that was too much. I mean, I guess, I view it as -- it's a positive to us. I view it -- we put that capacity in place, we get the supply chain humming. The demand is clearly there and the strength in equipment and system sales, we think, will continue to materialize. And just as we did last quarter, we'll provide an update relative to our 2022 expectations. And then you get to some of the end markets. Another positive one is just as things open up, these larger venues that are opening up. We've seen the food service side. It's really starting in the second quarter as well as into the third, especially when you do the comparables, have been favorable. With Omicron especially in the U.S., starting to settle now and these larger venues starting to open, we're definitely getting the strength in our food service side that is materializing, and we hope that, that continues. And, knock on wood, we just hope that, that continues in terms of things opening up and people being more open to branch out and attend these larger venues. And then before I get to the negatives, is the SEE operating engine. We went from a very successful reinvent SEE program over the past 3 years in terms of really just turning everything upside down in terms of how we operate, how we function, how we're organized and just did a great job. I've been with the company a little over a year, but the power of what has been done, the foundational side of driving productivity is what we now call the SEE operating engine. So we've got all the framework to continue to drive productivity within our operations and the discipline around that. In an ideal world, that's going to offset your inflation at a minimum. We're in a different world right now with the inflation hitting us everywhere. So now when you look at 2022, you got to couple that with the pricing actions we've taken. Pricing is not only for the raw material side, but it's also for other inflationary pressures. And we just announced another 5% to 10% increase that will happen on a global scale based on product, based on -- we can be very much personalized to that particular region and that customer base in those end markets. So that's on the positive. And then you get to the negative side of it. And it's really this inflationary pressure. I mean, we've been, what, 3, 4 -- almost a year now for purpose of price increases given the inflationary pressure, started with raw material. Now it's in everything else in terms of what we're experiencing on the inflation side, not unlike many others. So pricing and being able to have that favorable price/cost spread as we close out the fourth quarter, we're feeling good about that. But I don't want to overemphasize that in the negative. And we consciously said pricing with care, meaning we're not going to eat it all. We clearly have to be in a position to pass that price on. But how can we help our end customers in driving productivity in their operations? And that's what we mean by pricing with care. And then the second item is just the supply disruptions getting better, clearly, getting better versus what it was 3, 4 months ago but still ways to go on certain elements of what we bring in on the supply side. So I hope that answers your question.

Yes, yes. And we have a question from an investor. And I think it dovetails on what you just touched on in terms of, can you talk about resin availability and your resin price assumptions for embedded in your full year guidance?

Sure. Yes. So let me break that down because you've got the commodity resins that we saw that inflationary pressure kind of hit, call it, a year ago. And that's what you saw most of last year in our ability to have to bring that in as well as price it accordingly and get ahead of the curve, which we saw in the fourth quarter in terms of price cost spread. And we're seeing that level off, and some is projecting that's going to come down. The specialty resins, certain chemicals and other components or other materials that we use in our operations, we've seen spike over the past, call it, 3 to 4 months. So now you got the benefit of more the commodity side leveling off coming down. But unfortunately, other parts of what we bring in to satisfy that product in terms of satisfy the demand for our customers is increasing. That's on the material side. So going into this year, we expect that materials piece to be roughly a $200 million headwind to our numbers. However, on the pricing side, we're looking to more than offset that. And that momentum on pricing going into the year, we expect a favorable price cost spread to more than offset that. But pricing this year is also taking into consideration the nonmaterial inflationary pressures, which I'll just put it in a bucket of everything else, as we evolve realized both in our work environment as well as our personal environment. Inflation is upon us, and we're trying to manage through it the most effective way we can.

Great. And just a couple of follow-ups on automation. In terms of customer retention with maybe an automation customer, machinery customer versus other types of customers. Are you seeing that meaningfully different? If you can talk about maybe the payback period for customers with some of your automation offerings. And then just a question in terms of like what value are you delivering to the customer, whether it's cost reduction, increased production, headcount reduction, safety like?

Yes. Maybe the second part of your question because it's really -- that's the selling part, too, is give us the opportunity to get into your operations customers, if you will, in terms of what we're able to provide on the automation side, so you can drive the productivity in your savings. And we've got proven examples to have basically a quick payback a few years, 3 years of what we're saying less than a 3-year payback and we've got proven results as a result of being able to do that. So you make that initial investment, you're going to get that payback less than a 3-year time period. And that, I'll call it, somewhat sells itself in terms of as we are able to confidentially share those case studies with other customers and be able to realize net savings. That provides a lot of stickiness to what we're able to do with customers we have as well as new customers. And I even go as far to say win customers back, meaning the broader offering of what we now offer through automation. We're winning with our existing customer base, if customers, for whatever reason, years ago may have left us what other ways for, let's say, just on the material side, now being able to bring them back into what we're able to offer and selling that value proposition to them and showing them real life examples of how that can save them tremendous amount of money, good payback on what we provide, we're getting that demand. That demand is up. And that's what we try to profile. That $450 million roughly we did last year, better than $500 million in 2022 with the expectation to continue to grow that over time. Ideally, Anthony, it represents less than 10% of our sales. We like to say it represents 25% of our sales, the equipment piece of it, the equipment and service side of it, and that's what we're driving for.

Right, right. And then maybe just a follow-up on the pandemic. And there are companies that are sort of viewed or technologies that are viewed as sort of pandemic beneficiaries and maybe some of those companies give some of that benefit back as we reopen and maybe for other companies, you have a sort of a secular change in just how consumers behave and how customers behave. How would you sort of characterize automation? And as we've seen kind of these Omicron absenteeism and cases come up, I mean, do you see it in your business in terms of orders? And if we do kind of reopen fully in '22, and it seems pretty reopened here in Florida, like is there a risk? Or what do you think about maybe automation slowing down or just general thoughts on that.

Yes. No, I think it just drives for a secular trend. I mean automation in terms of -- our customers' operations in terms of driving productivity, keeping people out of harm's way. The technology is there, the capability is there, the investment as long as they're getting that return and we're being able to showcase that. We definitely think that's on that secular trend that we're going to continue to benefit from going forward. Specific to your question around end markets and as things settle, things open up, clearly, the obvious one for us is food service. I mean that's going to continue to do extremely well on the food side as these larger venues open up. And they say or might say, okay, as things do open up, and I don't know, people go shopping versus e-commerce, et cetera, does that impact your protective business somewhat? I don't know. Maybe it's personally speaking, I don't see that part of that slowing down all that much in terms of the online activity, e-commerce. And again, that's a U.S.-centric comment there, not from a global point of view. I do think that the opportunity for our protective business thinking about e-commerce, thinking about protecting goods, being able to focus on the sustainability side of what we package, meaning we have a concerted effort to do more on paper packaging, an opportunity that we offer represents around 15% to 20% of our sales today. So the opportunity for us to grow that space over time, in addition to make our core products more sustainable, circular, if you will. And we are doing our part, and that's reflected in our goals, environmental goals to be able to contribute in that way.

Great. Great. And we have an investor question on sort of capital intensity. So you touched on it a little bit before, but sort of what are the capital needs as you build out this automation platform? And I think on the 4Q call, you just talked a little bit about CapEx expectations, but...

Sure. Yes. We're coming off a year. We spent $213 million in CapEx in 2021, roughly $180 million, if I recall in 2020. This year, we're profiling out a $240 to $260 million number from a CapEx. A good chunk of that is focused on the capacity side, being able to have the capacity in place to be able to satisfy demand. Automation, a little bit more of an automation [ bent ] in terms of where the volume is and that productivity is. But in a general sense, we spend roughly 4% of our sales on CapEx, combination of growth, combination of automation as well as maintenance type of capital as well as productivity capital. But as we say, we don't -- we're not going to starve capital. I mean, from a return on investment point of view, we have a leading industry ROI and investors are saying, put more in place if you're going to deliver that 15% ROI type of number. So we do it consciously though. I mean I don't want to be cavalier around it. We don't start capital. At the same time, the business case needs to be there. I sit, obviously, on the investment committee, we've got a core group of individuals, leaders with a part of our XLT that sit through the investment committee. We go through these business cases. We challenge each other in terms of when, what the opportunity is, what the payback is, et cetera, et cetera. So we can deliver on that 15% ROI as we go forward, recognizing from a cost of capital being 7% to 8% roughly for us, we're focused squarely on making sure that's greater than our cost of capital.

And that maybe segues into potential M&A. So you raised your target on automation and a component of that was potential acquisitions. Can you just talk broadly about pipeline valuation, availability of assets and sort of like what a potential target or targets could bring to Sealed Air?

Very good. So maybe if I -- if you think about the pipeline for us and where we spend time as an XLT with talking about those M&A opportunities. Kind of geared more towards the automated APS like, if you will, how do we bring in another APS type of business from an automation point of view that we can put now into our model as it relates to the automation model to be able to generate the commentary we mentioned earlier. Many of those are privately-owned companies. And as a result, building those relationships and being able to get to an opportunity where we can transact is where we spend a good deal of time spending those -- spending that time from a relationship point of view. And what I mean by that is getting them to recognize that we're looking to bring them into this global structure. They may be a European-centric business. You know what I mean? It may be very much a regional-focused automation business, and we're going to look to bring them in and globalize them over time versus consolidation. It's more of how do we build that capacity for us globally. And then other things that are on the pipeline relate to our 3 focus areas, which is automation, digital and think about just sustainability in terms of how we advance what we're doing on the sustainability side, thinking about paper, as I mentioned, before, et cetera. Multiples, I haven't called the necessarily -- I won't say necessarily rich. We're not going to overpay, but at the same time, you're looking at a 10 -- potentially 12x, 13x multiple but the opportunity is to bring it into what we can provide, we being seek and provide to drive the productivity savings, that integration and look to globalize them. And just as we talk about APS, APS if you think about after the fact to get this down to like a 7, 8 turn versus paying what we paid was a double-digit turn for the business coming up on 3 years ago. So that's how we're thinking about it. So the pipeline is good. So you get [ them ] into the capital allocation. It's investing in ourselves, looking at those inorganic opportunities for M&A, which includes SEE Ventures. And then you get into the shareholder-friendly actions in the form of a dividend and share buyback.

Right. And just maybe closing out that. Can you just talk about why APS was such a kind of a home run. I mean, obviously, you'd like to replicate that. But why was it -- I mean you worked it down to 7 turns or 7.5 turns. What did it bring to Sealed Air?

Yes, yes. No, I just need the equipment offering and then having the ability to be able to leverage our core capability through the APS model. And you name it, I mean, in terms of supply chain synergies, putting in the capacity, they've got a global footprint, investments we're making outside of just their U.S. operations and expanding what we do for capacity to be able to sell what they offer. And again, that's where I get back to the power of SEE being this global company, taking -- I mean, it was a good-sized company, but relatively small to the global scheme of things, and now we're able to more than -- I won't say double yet. We're not there yet, but we'll be there in terms of just being able to sell what sell through our system, if you will, through SEE what they offer. So we're not shy about putting in the capacity, globalizing the marketing efforts in terms of being able to sell that to our customers. And that's where I think the success is. And it starts from the top as well. I think one of the benefits, Ted and his background bringing to Sealed Air, given the equipment side of it and being able to put that discipline in place as well as others, given our background, to be able to put that in place and just drive that model and making it very effective.

Right, right. And we have a couple more questions here. You touched on digitization. Can you describe a little bit more the digital capabilities for Sealed?

Sure, sure. So 2 acquisitions under SEE Ventures that we've made, [ Pixel ] a few years back and then most recently, FoxPak as well as some of our own capability. But it's literally just being able to watermark, if you will. Put information on the package itself. And I was joking with the team and I'll joke with you. Anyone who watch the Super Bowl, all of a sudden, you see this thing flash on your screen. Who picked up their phone and said, "Okay, what is that?" And I use that as an example, just to showcase that, that is on our packaging. So it brings a ton of information to life in terms of what's inside, where it was packed, what exactly location, timing, contents, authenticity, if you will, in terms of what's inside. So that digital piece of it is going to allow us to -- from a marketing point of view, being able to upsell the natural products that we sell mostly on the protective side, but it also applies to food. Think about the wrapping of any protein being able to just see information. Yes, some things are printed there, but we're taking to try to digitize that to provide the information more powerful than just trying to read the fine print of something that's packaged.

Right. And a couple of more questions. One on sustainability. Can you talk about the kind of relative opportunities between paper and plastic. And can you remind us sort of what percentage of your portfolio is paper and maybe where that could go?

Sure. Yes. And paper represents roughly 15% or so of what we offer today. So it's an area we feel is an opportunity for us, and we have been growing it quite substantially. So we're trying to be materials agnostic, if you will, we kind of use that expression to say we're in the business to protect your packaging, whatever it may be. So we want to be able to customize to solve whatever challenge you may have in that packaging, trying to solve that solution with whatever we offer. So material agnostic to what we provide. So we do expect material being paper to increase over time. At the same time, driving sustainability efforts on the plastic side, if you will the packaging side, in many forms. I mean, literally changing formulas, taking the thickness out of certain materials that we manufacture for purposes of protection. And that's it. I mean we need to be a part of the solution. We recognize that, and that's what's driving us is that sustainability, if you think about the ESG type of metrics.

Got it. Got it. And we have a question from an investor. Both food and protective have elements of cyclicality, where do you think the protein cycle and the industrial cycle are? Understand that's kind of a tough questions to answer, but like the only thing I'd add to it is maybe what's different this cycle from your perspective or just looking at Sealed portfolio?

Sure. You recognize the cycles, whether it be just the protein cycle in general, whether it be fresh red meat, you think about the other parts, poultry side of the equation globally. We look at what's coming down, what's then rebuilding and just trying to measure those cycles, if you will, cattle cycle as well as other parts of our end market. I'm talking on the food side of the equation. And that's balanced. So we see them being stable to the extent some are down, but at the same time, others are growing. So we are in this low single-digit organic growth in our food business is kind of how we're going into this year. Same thing with protective by the way. So we're in this 2% to 3% type of growth range heading into this year. That's our early -- kind of an early look coming off of 6% growth last year. So I want to look at those numbers and say, okay, well, something obviously is changing if we're not being able to sustain 6%. But the opportunity for us is as we manage through the food and the various cycles, the protective side is providing more opportunities. I talked about paper as an example, but other things we're doing on the protective area that we think can more than offset any downturn that we may experience on the food side. And again, we're talking -- Anthony, we're talking smaller percentages. We don't see kind of a 10% headwind heading our way. And all of a sudden, how are we going to make up for this 10% headwind? These are small numbers.

Right, right. And I guess we're coming up on time, but maybe one last one for me. I mean you and Ted both kind of came from outside of the company and you have -- your previous companies had machinery and kind of an automation focus or a capability. Can you just talk about your experience as being kind of coming from the outside to Sealed? I think last year, Jan 1 was you...

You got it. January 4, Anthony.

Okay. In terms of sort of what you felt kind of day 1, what was Sealed Air doing well? What was it doing not so well and just kind of -- yes.

Yes. First on the well side. I mean, I just think the -- I give a lot of credit to the team in terms of the Reinvent SEE has absolutely been a very much a success story to what we've been able to do. And it really -- yes, you can think of it as a restructuring program, but it's more than that. It really is. It really is turning everything upside down, thinking about how we operate, how we organize, how we process, how we market. You name it, it got touched in Reinvent SEE. And the output of that is now the SEE Operating Engine, meaning take that take that core capability of what you created, what we created within Reinvent SEE and apply that now under the SEE Operating Engine umbrella as we move forward. So that would be the first one, I'd say, to be honest, given the background and the different companies that I've been with in my past very strong, very positive, tops down driven. At the same time, the core of the organization that middle management is driving productivity savings because they know it's there, and it's going to continue to survive. Then you get to I'd call it maybe some basic blocking and tackling on an automation company, think about orders, bookings, if you will, being able to -- we do the book-to-bill, we got it, right? We got the -- we know we booked, we know we billed. But then driving a backlog discussion, driving a -- when we bring in those orders and we've got an established backlog, being able to report on it. So Lori and I intend to kind of communicate with investors the power of that backlog. And that backlog, we expect -- you can expect us to ship -- so if I said a number, if I said, we have $200 million in our backlog, and we expect to ship that $200 million over the next 6 months or let's say, 80% over the next, give investors visibility because that then gives you confidence in the outlook of the numbers that we show. And I wouldn't call that a criticism. It's more of -- it's just a fundamental tool, if you will, process that an automation company has that we are making sure before we go public with that kind of information, is well understood, well documented and well supported.

Great. Great. Well, Chris, we're coming up on time, but this has been an extremely helpful update, and we look forward to keeping the conversation going and getting more questions and talking more during the quarter and post conference. So...

Very good. Very good afternoon. Thank you. Thank you for your time, and I appreciate everyone's interest in Sealed Air. We've got a lot of fun stuff going on. So thanks for your interest.

Great. Great. Thanks, Chris.