Q4 2021 Sonoco Products Co Earnings Call

Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 Sunoco Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 Sonoco earnings Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone please be advised that today's conference is being recorded.

Speaker 1: If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Roger Schrum, Vice President Investor Relations. You may begin.

If you require any further assistance. Please press Star then zero I would now like to turn the conference over to your speaker for today, Roger Schrum, Vice President Investor Relations you may begin.

Thank you to Wanda and good morning, everyone and welcome to Sunoco fourth quarter and full year 2021 Investor Conference call.

Speaker 2: Thank you, Tawanda. And good morning, everyone. And welcome to Sunoco's fourth quarter and full year 2021 investor conference.

Joining me today are Howard Coker, President and Chief Executive Officer, Rodger Fuller Executive Vice President and Julie Albrecht, Vice President and Chief Financial Officer.

Speaker 2: Joining me today are Howard Coker, President and Chief Executive Officer, Roger Fuller, Vice President and Julie Albrecht, Vice President and Chief Financial Officer.

A news release reporting our financial results was issued before the market opened today and is available on the Investor Relations website at Sonoco Dot com.

Speaker 2: A news release reporting our financial results was issued before the market opened.

Speaker 2: and is available on the Investor Relations website at Sanoko.

Speaker 2: In addition, we will reference a presentation on our fourth quarter financial results, which was posted on the webinar. Following this presentation, we examine a few essential components andCity employees getting involved in the initial information successful

We will reference a presentation on our fourth quarter financial results.

Which was posted on the website this morning.

Before we go further let me remind you that today's call and presentation contains a number of forward looking statements based on current expectations estimates and projections.

Speaker 2: Before we go further, let me remind you that today's call and presentation contains a number of forward-looking statements based on current expectations, estimates, and projections.

Speaker 2: These statements are not guaranteed of future performance and are subject to certain risks and uncertainties. Therefore, actual results may not be guaranteed of future performance and are subject to certain

These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore actual results may differ materially.

Speaker 2: Furthermore, today's presentation includes the use of non-GAAP financial measures, which Management Beliefs provides useful information to invest in.

Furthermore, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations.

Speaker 2: about the company's financial conditions and results of operation.

Speaker 2: Further information about the company's use of non-GAAP financial measures, including definitions as well as a reconciliation of those measures to the most closely related GAAP measure, is also available in the investor relations section of our website.

Further information about the company's use of non-GAAP financial measures, including definitions as well as a reconciliation of those measures to the most closely related GAAP measure is also available in the Investor Relations section of our website.

Now with that I'm going to turn it over to Julie.

Speaker 3: Thank you Roger. I'll begin on slide three where you see that earlier this morning we reported fourth quarter earnings per share on a gap basis of 66 cents and base earnings of 90 cents per share, which is the high point of our guidance range of 84 to 90 cents per share and eight cents greater than the base EPS we delivered in the fourth quarter of 2020.

Thank you Roger.

Begin on slide three where you see that earlier. This morning, we reported fourth quarter earnings per share on a GAAP basis of 66.

And base earnings of <unk> 90 per share, which is the high point of our guidance range of 84 to <unk> 90 per share and <unk> <unk> greater than the base EPS, we delivered in the fourth quarter of 2020.

Speaker 3: Our fourth quarter operational results were driven by favorable total productivity and importantly also by positive price-cost.

Our fourth quarter operational results were driven by favorable total productivity and importantly, also by positive price cost <unk>.

Speaker 3: These factors were partially offset by unfavorable impacts from lower volume mix, solely driven by four less shipping days in the quarter, as well as the divestiture of our displays and packaging business.

These factors were partially offset by unfavorable impact from lower volume mix solely driven by four less shipping days in the quarter.

What was the divestiture of our display and packaging business.

Now moving to our base income statement on slide four and starting with the top line you see that sales were $1.439 billion up $63 million or nearly 5% over the prior year period.

Speaker 3: Now moving to our base income statement on slide four, and starting with the top line, you see that sales were $1,439,000,000, up $63,000,000, or nearly 5%, over the prior year period.

Speaker 3: I will review more details about our key sales drivers on the sales bridge in just a moment.

I will review more details about our key sales drivers on the sales bridge in just a moment.

Speaker 3: Gross profit was $264 million, $11 million below the prior year.

Gross profit was $264 million $11 million below the prior year.

Speaker 3: This resulted in an 18.3% gross profit as a percent of sales, compared to 20% in the fourth quarter of 2020.

This resulted in an 18, 3% gross profit as a percent of sales compared to 20% in the fourth quarter of 2020.

SG&A expenses net of other income $143 million and $11 million reduction year over year.

Speaker 3: SG&A expenses net of other income or 143 million dollars, an 11 million dollar reduction year over year.

Speaker 3: This decrease was expected and was mostly driven by different timing for incentive comp expenses in each year.

This decrease was expected and was mostly driven by different timing for extensive incentive comp expenses in each year.

Speaker 3: So all of this resulting in fourth quarter operating profit of $125 million.

So all of this resulting in fourth quarter operating profit of $125 million.

I'll discuss the key drivers on the operating profit bridge in a few minutes.

Speaker 3: I'll discuss the key drivers on the operating profit bridge in a few minutes.

Speaker 3: Net interest expense of $12 million was a $6 million reduction from the prior period due to lower debt balances and a lower average interest rate.

Net interest expense of $12 million was a $6 million reduction from the prior period due to lower debt balances.

And a lower average interest rate.

Speaker 3: Income tax expense of $27 million was $1 million higher than the prior year's quarter, reflecting our higher pre-tax earnings as our effective tax rate was relatively flat quarter as a quarter.

Income tax expense of $27 million was $1 million higher than the prior year's quarter, reflecting our higher pre tax earnings as our effective tax rate was relatively flat quarter over quarter.

Moving down to net income our fourth quarter 2021 base earnings were $89 million.

Speaker 3: Moving down to net income, our fourth quarter 2021 base earnings were $89 million, compared to $83 million in 2020, an increase of approximately 7%

Compared to $83 million in 2020, an increase of approximately 7%.

Speaker 3: Now looking at the sales bridge on slide five, you see volume was lower by $38 million for almost three perc...

Now looking at the sales bridge on slide five you see volume was lower by $38 million or almost 3% driven by our consumer and industrial segments and somewhat mitigated by stronger demand in our all other group of businesses.

Speaker 3: driven by our consumer and industrial segments, and somewhat mitigated by stronger demand and our all other group of businesses.

Speaker 3: It is important to note that we had four less shipping days in the fourth quarter prior to the fourth quarter of 2020, which reflects around a 6% head.

It is important to note that we had four less shipping days in the fourth quarter prior to the fourth quarter of 2020, which reflects around a 6% headwind.

Speaker 3: So adjusting to a same day basis, our total volume mix actually increased by approximately 3 per cent.

So adjusting to a same day basis, our total volume mix actually increased by approximately 3%.

Consumer packaging volume mix was down $22 million or almost 4%, but when adjusted for the same number of days. This segment's volume increased in the low single digits.

Speaker 3: consumer packaging volume mix was down $22 million, or almost 4%, but when adjusted for the same number of days, this segment's volume increased in the low single-digit.

This was driven by solid demand improvement in flexible and plastics food, while global rigid paper containers was down slightly as volumes did drop off in late December as certain key customers were negatively impacted by COVID-19 and supply chain issues.

Speaker 3: This was driven by solid demand improvement in flexibles and plastics food, while global rigid paper containers was down slightly, as volumes did drop off in late December , as certain key customers were negatively impacted by COVID and supply chain issues.

Speaker 3: Industrial packaging volume mix was down $26 million, or almost 5%.

Industrial.

Real packaging volume mix was down $26 million or almost 5%.

But actually higher by 1% to 2% when adjusting for the same number of days.

Speaker 3: but actually higher by 1% to 2% when adjusting for the same number of days.

Speaker 3: On this adjusted basis, global tubes, cores, and cones experienced stronger demand, but this was mostly offset by lower volumes in our global paper operation.

On this adjusted basis global tubes cores and cones experienced stronger demand, but this was mostly offset by lower volumes in our global paper operations.

Finally, our all other group saw volume mix grow by almost 6%, but increased by an estimated 12% on the same day basis and all of this is adjusted to exclude the display and packaging divestiture.

Speaker 3: Finally, our all-other group saw volume mix grow by almost 6%.

Speaker 3: but increased by an estimated 12% on the same day basis. And all of this is adjusted to exclude the display and packaging divestiture.

Speaker 3: This stronger demand was driven by our industrial plastics and our thermo-safe.

This stronger demand was driven by our industrial plastics and our service based businesses.

Speaker 3: So moving down the sales bridge to price, you see that selling prices were higher year over year by $204 million as we continue to battle inflation globally.

So moving down the sales bridge to price you see that selling prices were higher year over year by $204 million as we continue to battle inflation globally.

Speaker 3: Around two-thirds of this increase was recognized in our industrial segment driven by both contractual and open market prices.

Round two thirds of this increase was recognized in our industrial segment, driven by both contractual and open market price increases.

Moving down to divestitures and acquisitions.

Speaker 3: Moving down to divestitures and acquisitions, you see a top line negative impact of $88 million, which is driven by the divestiture of our former display and packaging business in the all other groups.

Top line negative impact of $88 million, which is driven by the divestiture of our former display and packaging business in the all other group.

And finally, the sales impact from foreign exchange and other was negative by $16 million and the primary driver was the negative foreign exchange translation impact from the stronger U S dollar year over year.

Speaker 3: And finally, the sales impact from foreign exchange and other was negative by $16 million. And the primary driver was the negative foreign exchange translation impact from the stronger US dollar year over year.

Moving to the operating profit bridge on slide six and starting with volume mix, our lower sales volume driven by the four less shipping days and combined with the impact of mix had a negative impact on operating profit of $20 million.

Speaker 3: Moving to the operating profit bridge on slide six and starting with volume mix, our lower sales volume driven by the four less shipping days and combined with the impact of mix had a negative impact on operating profit of $20 million.

Net is the impact of total productivity, which added $14 million of earnings year over year with the favorable impact being predominantly in our consumer segment.

Speaker 3: Next is the impact of total productivity, which added $14 million of earnings year over year with a favorable impact being predominantly in our consumer sector.

Moving to price cost I will remind you that this category includes the earnings benefit from higher selling prices as well as the impact of total inflation.

Speaker 3: Moving to price cost, I will remind you that this category includes the earnings benefit from higher selling prices, as well as the impact of total inflation.

Speaker 3: In the fourth quarter, we had $11 million of favorable price costs, with most of this impact falling in our industrial sector.

In the fourth quarter, we had $11 million of favorable price cost with most of this impact falling in our industrial segment.

As usual there is a slide in the appendix that shows southeast OCC official board market pricing.

Speaker 3: As usual, there is a slide in the appendix that shows Southeast OCC official board market prices.

Speaker 3: There you'll see the trend of declining OCC prices during the fourth quarter of 2021 and this trend does continue in early 2021.

Youll see the trend of declining OCC prices during the fourth quarter of 2021 and this trend does continue in early 'twenty two.

Moving to divestitures and acquisitions, you'll see that the divestiture of our former display and packaging business reduced operating profit by $10 million.

Speaker 3: Moving to divestitures and acquisitions, you see that the divestiture of our former display and packaging business reduced operating profits by $10 million.

Speaker 3: Moving now to the segment analysis on slide 7, you see that consumer packaging sales were up by 3.3 percent, driven by higher selling prices, which were mostly implemented to offset cost inflation.

Moving now to the segment analysis on slide seven you see that consumer packaging sales were up by three 3% driven by higher selling prices, which were mostly implemented to offset cost inflation.

Speaker 3: Our consumer segment operating profits fell by 14.2%, driven by unfavorable price costs, as well as lower volume due to fewer shipping days. And both of these were partially offset by strong productivity results.

Our consumer segment operating profit fell by 14, 2% driven by unfavorable price cost as well as lower volumes due to fewer shipping days and both of these were partially offset by strong productivity results.

Speaker 3: our consumer segment margin declined to 9.6% versus the fourth quarter of 2020 when their margin was 11.6%

Our consumer segment margin declined to nine 6% versus the fourth quarter of 2020, when their margin was 11, 6%.

Moving to our industrial segment sales grew by 25% due to year over year price increases, partially offset by lower volume solely due to the fewer days in the period.

Speaker 3: Moving to our industrial segment, sales grew by 20.5% due to year-over-year price increases partially offset by lower volume solely due to the fewer days in the period.

Industrial operating profit surged by 32, 6% driven by favorable price cost, partially offset by lower volume or.

Speaker 3: Industrial operating profits surged by 32.6 percent, driven by favorable price costs partially offset by lower volume.

Speaker 3: Our industrial segment's margin profile increased to 8.7% compared to last year's 7.9%.

Our industrial segment margin profile increase to eight 7% compared to last year's seven 9%.

Our all other sales declined by 25, 7% driven mostly by the sale of our display and packaging businesses, but partially offset by the stronger volume mix and higher pricing.

Speaker 3: Are all other sales declined by 25.7 percent, driven mostly by the sale of our display and packaging businesses, but partially offset by the stronger volume mix and higher prices?

Speaker 3: All other operating profit decreased by 34.5% due to the display and packaging divestiture and price cost had

All other operating profit decreased by 34, 5% due to the display and packaging divestiture and price cost headwind.

Speaker 3: Margins declined to 5.8% from the prior year's 6.5%.

Margins declined to five 8% from the prior year's six 5%.

Speaker 3: So for the total company, sales were higher by 4.6%. And operating profit was relatively flat, resulting in a company-wide operating margin of 8.7% compared to last year's 9%.

So for the total company sales were higher by four 6% and operating profit was relatively flat, resulting in a company wide operating margin of eight 7% compared to last year's nine 2%.

Speaker 3: Listening to cash flow, about halfway down the next slide, you see that our full year operating cash flow was $299 million compared with $706 million in 2012.

Shifting to cash flow about halfway down the next slide you see that our full year operating cash flow was $299 million.

Compared with $706 million in 2020.

Speaker 3: While we did have various large non-cash items related to our pension termination process, I am going to focus my comments on the most important drivers to actual cash

While we did have various large noncash items related to our pension termination process I am going to focus my comments on the most important drivers to actual cash flow.

Speaker 3: So first, during 2021, we contributed $125 million to our U.S. Inactive Pension Plan related to the termination process of that plan.

First during 2021, we contributed $125 million to our U S and active pension plan related to the termination process of that plan.

Speaker 3: Another important driver was the year-over-year $158 million negative swing in cash flow from net working capital.

Another important driver was the year over year $158 million negative swing in cash flow from net working capital.

During 2021, our working capital balances steadily increased driven by increased business activity inflation as well as unique supply chain dynamics.

Speaker 3: During 2021, our working capital balances steadily increased, driven by increased business activity, inflation, as well as unique supply chain dynamics.

Speaker 3: I'll note that our increased working capital balances during the fourth quarter of 21 is contrary to our historical trend.

I will note that our increased working capital balances during the fourth quarter of 'twenty. One is contrary to our historical trends. However, the current operating environment uniquely impacted our working capital balances, which is reflected in the higher year end position.

Speaker 3: However, the current operating environment uniquely impacted our working capital balances, which is reflected in the higher year end.

Speaker 3: Moving down to our full year CapEx spend, our net spend was $243 million in 2021 compared to $181 million in the prior year.

Moving down to our full year Capex spend our net spend was $243 million in 2021 compared to $181 million in the prior year.

Speaker 3: A $62 million increase is mostly due to spending on Project Horizon.

The $62 million increase is mostly due to spending on project horizon.

Speaker 3: This takes us to 2021 free cash flow of $56 million compared to $525 million in 2020.

This takes us to 2021 free cash flow of $56 million compared to $525 million in 2020.

I'll also highlight that in 2021, we paid cash dividends of $179 million.

Speaker 3: I'll also highlight that in 2021, we paid cash dividends of $179 million.

Speaker 3: On slide 9, you see that our balance sheet and our liquidity position remain strong, which did serve us well as we completed the Ball Metal Pack acquisition in January .

On slide nine you see from our balance sheet and our liquidity position remained strong which did serve us well as we completed the <unk> acquisition in January .

As a reminder, both Moody's and S&P affirmed our credit ratings in conjunction with this acquisition.

Speaker 3: As a reminder, both Moody and S&P affirmed our credit rating in conjunction with this acquisition.

So that concludes my review of our fourth quarter results. So I'll move into my review of our first quarter and full year guidance for 2022.

Speaker 3: So that concludes my review of our fourth quarter results. So I'll move into my review of our first quarter and full year guidance for 2022.

Beginning at the top of Slide 10, Youll Youll first see our reported first quarter and full year 2021 base earnings per share of <unk> 90, and.

Speaker 3: Beginning at the top of slide 10, you'll first see our reported first quarter and full year 2021 base earnings per share of $0.90 and $3.55 respectively.

And $3 55, respectively.

So following a review of our consumer peers and discussions with outside advisers, we've decided to treat amortization of acquired intangibles as a non base expense going forward.

Speaker 3: So following a review of our consumer peers and discussions with outside advisors, we've decided to treat amortization of acquired intangibles as a non-base expense going forward.

Speaker 3: So going forward and including the metal pack acquisition, approximately 50% of our sales are in our consumer sector.

So going forward and including the metal pack acquisition, approximately 50% of our sales are in our consumer segment. So we feel this change to our base earnings represents a more clear view of our operational performance and improved comparability to our consumer peers.

Speaker 3: So we feel this change to our base earnings represents a more clear view of our operational performance and improved comfortability to our consumer peers.

Speaker 3: When removing this amortization expense from base earnings, our 2021 restated earnings per share are $1.00 and $3.93 for the first quarter and the full year of 2021 respectively.

When removing this amortization expense from base earnings our 2021 restated earnings per share.

Our $1 and $3 93 for.

For the first quarter and the full year of 2021, respectively.

Speaker 3: Our outlook for first quarter 2022 base earnings using the new definition and including our recently acquired Ball Metal Pack business is a range of $1.25 to $1.35 per share.

Our outlook for first quarter 2022 based earnings using the new definition and including our recently acquired ball metal pack business is a range of $1 25.

To $1 35 per share.

Speaker 3: while our full year 2022 base earnings are expected to be between $4.60 and $4.80 per share.

While our full year 2022 base earnings are expected to be between $4 60.

$4 80 per share.

Speaker 3: At the midpoint of these ranges, we have added back 17 cents in the first quarter related to amortization expense, and 65 cents is added back for the full year.

At the midpoint of these ranges we have added back 17 in the first quarter related to amortization expense and 65 is added back for the full year.

This full year guidance represents a 20% increase over our 2021 restated base earnings per share and this increase is driven by both strong performance by our legacy businesses.

Speaker 3: This full year guidance represents a 20% increase over our 2021 restated base earnings per share. And this increase is driven by both strong performance by our legacy businesses, and by the addition of ball metal.

And by the addition of ball metal pack.

Our 2022 guidance is based on the same key assumptions for our legacy business, but we reviewed in early December at our analyst day.

Speaker 3: Our 2022 guidance is based on the same key assumptions for our legacy business that we reviewed in early December at our Analysts' Day. And in a few minutes, Howard will provide additional comments about key drivers to our 2022 outlook, including our strong start to this year.

And in a few minutes Howard will provide additional comments about key drivers to our 2022 outlook, including our strong start to this year.

Specific to our acquisition of ball metal pack I will note that our 2022 sales are now expected to be between 7 billion and $7 3 billion, including the sales from the acquisition.

Speaker 3: Specific to our acquisition of Ball Metal Pack, I'll note that our 2022 sales are now expected to be between $7 billion and $7.3 billion, including the sales from the acquisition.

Also we've increased our forecast for interest expense by $34 million to a new full year estimate of $88 million.

Speaker 3: Also, we've increased our forecast for interest expense by $34 million to a new full year estimate of $88 million.

Speaker 3: In addition, we're providing an outlook for our full-year EBITDA, which is between $910 and $960 million.

In addition, we're providing an outlook for our full year, EBITDA, which is between 910 and $960 million.

Moving to slide 11, and our 2022 cash flow guidance, we are targeting to generate $715 million of operating cash flow and $390 million of free cash flow.

Speaker 3: Moving to slide 11 in our 2022 cash flow guidance, we are targeting to generate $715 million of operating cash flow and $390 million of free cash flow, both significantly above our 2021 results.

<unk> significantly above our 2021 results.

Similar to our base earnings are key assumptions for our cash flow outlook are consistent with what we reviewed in December .

Speaker 3: Similar to our base earnings, our key assumptions for our cash flow outlook are consistent with what we reviewed in December . However, we have now included the impact of what I'll call Sunoco metal packaging by including their EBITDA and CAPEX spending, as well as the incremental interest and income tax expenses, which are roughly offset by the cash tax benefits we expect to receive related to purchase accounting. So that concludes my...

However, we have now included the impact of what I'll call Sunoco metal packaging by including their EBITDA and Capex spending as well as the incremental interest and income tax expenses, which are roughly offset by the cash tax benefit we expect to receive related to purchase.

<unk>.

So that concludes my comments, so I'll turn it over to Howard.

Speaker 4: Thanks, Julie, and good morning, everyone. Let me share my thoughts on our 2021 performance.

Great. Thanks, Julian and good morning, everyone. Let me share my thoughts on our 2021 performance.

Speaker 4: provide you an update on our integration of the ball metal pack acquisition and talk briefly about what market trends we are starting to see in 2022.

Provide you an update on our integration of the <unk> acquisition and talk briefly about what market trends, we are starting to see in 2022.

Speaker 4: You know, the look back at all we accomplished last year, I couldn't be more proud of our team, how they've worked together to produce results which achieved the high end of our guidance despite unprecedented headwinds from storms, supply

We will look back at all we accomplished last year I couldnt be more proud of our team worked together to produce results, which achieved the high end of our guidance. Despite unprecedented headwinds from storm supply chain disruptions inflation and the continuing effects of <unk>.

Speaker 4: inflation and the continuing effects of CODES.

Yes.

Demand recovered for many of our pandemic impacted businesses with volume mix rolling 3% for the year.

Speaker 4: Demand recovered for many of our pandemic impacted businesses with volume next growing 3 percent for the year.

Speaker 4: We aggressively drove price increases to counter higher raw material and non-material inflation.

Aggressively drove price increases to counter higher raw material and non material inflation.

Speaker 4: As Julie said, for the first time since mid-2019, we achieved a positive price...

As Julie said for the first time since mid 2019, we achieved a positive price cost relationship in the fourth quarter.

Speaker 4: We increased capital spending to fund more high-return projects, including our $125 million investment in Project Horizon.

We increased capital spending to fund more high return projects, including our $125 million investment in project Horizon.

Speaker 4: better focus our sustainability efforts, including setting aggressive science-based targets to meaningfully reduce greenhouse gas emissions over time.

Better focus our sustainability efforts, including setting aggressive science based targets.

Fully reduce greenhouse gas emissions over the next decade.

Speaker 4: Simplified our portfolio by exit exiting the display and packaging business and recently added ball metal pack Which further expands our sustainable consumer packaging?

We simplified our portfolio exiting.

The display and packaging business and recently added ball metal part, which further expands our sustainable consumer packaging offering.

Speaker 4: and, as Julie noted, will be immediately accretive to base earnings and cash.

As Julie noted will be immediately accretive to base earnings and cash flows.

Finally, we returned a record $400 million of cash to shareholders through dividends and share repurchases.

Speaker 4: Finally we returned a record 400 million dollars in cash to shareholders through dividends and share repurposing.

Back in December at our analyst meeting, we outlined our value creation strategy, which is focused on being the benchmark company for yield and stability in our industry.

Speaker 4: You know, back in December at our analyst meeting, we outlined our value creation strategy, which is focused on being the benchmark company for yield and stability in our enterprise.

Speaker 4: To meet our financial targets of $1 billion in annual EBITDA by 2026 without acquisition, we're focusing increased investment in our core consumer and industrial business.

To meet our financial targets of $1 billion of annual EBITDA by 2026 without acquisition, we're focusing increased investment in our core consumer and industrial businesses and consolidating around a uniform operating model to expand our competitive advantage.

Speaker 4: and consolidating around a uniform operating model to expand our competitive.

Speaker 4: while simplifying our structure to improve efficiency and effect.

Simplifying our structure to improve efficiency.

Correct.

As part of our invest in ourselves actions, we expect to spend around $325 million in 2022 to further accelerate growth and drive productivity savings. Just this week our board of directors approved approximately $20 million in capital to expand two of our flexible packaging facilities.

Speaker 4: As part of our invest-in-ourselves actions, we expect to spend around $325 million in 2022 to further accelerate growth and drive productivity.

Speaker 4: Just this week our board of directors approved approximately twenty million dollars in capital to expand two of our flexible packaging facilities.

Speaker 4: As a reminder, our flexible business achieved record top-line and bottom-line performance in 2020.

As a reminder, our flexible business achieved record topline and Bottomline performance in 2021.

To further grow this business is focused on developments around key capabilities, including complex form of nations coal through polishing loading.

Speaker 4: further growth, this business is focused on developments around key capabilities, including complex laminations, coalfield, pouching, letting

And specialty fashion, such as precision, scoring and specialty codes.

Speaker 4: specialty examinations, such as precision scoring and specialty code.

Speaker 4: At our Edinburgh, Indiana facility, we'll be installing a new Roto-Gravure Press along with the 3-Fly Adhesive Laminator. This new Gravure Press and Laminator, they are extremely efficient and able to run at speeds that are nearly 65% faster.

Our Edinburg, Indiana facility will be installing a new rotogravure press along with the three fly adhesive laminating.

This move will reveal for us in laminate are.

They are extremely efficient and able to run at speeds that are nearly 65% faster and so on existing equipment.

Speaker 4: and it will allow us to take on new business as we have become.

And it will allow us to take on new business as we have become capacity constrained.

Speaker 4: In addition, this new equipment has many sustainable attributes. This includes reducing at least 515 tons per year of greenhouse gas emissions while increasing our use of recycled, ready monofilm laminates for our Enviroflex line of more sustainable products.

In addition, this new equipment has many sustainable attributes. This includes reducing at least 515 tons per year of greenhouse gas emissions, while increasing our use of recycled ready mono film laminates for environments.

With flex line of more sustainable flawless and Elk Grove, Illinois.

Speaker 4: In Elk Grove, Illinois, we will be installing a new state-of-the-art flexographic press, which will replace two 20-year-old machines.

We will be installing a new state of the art, Portsmouth graphic plus which will replace 220 year old machines.

Speaker 4: This press will produce significant productivity savings, enable us to expand production of peelable and resealable living products across multiple foods.

This festival produce significant productivity savings enable us to expand production of payable and receivable living products across multiple food markets.

Speaker 4: Now let me switch gears and talk briefly about our January 26th acquisition of Ball Metal.

Now, let me switch gears and talk briefly about our January 26 acquisition of all metal part we were extremely pleased to have been able to complete the acquisition early jump started the integration process.

Speaker 4: We were extremely pleased to have been able to complete the acquisition early and have jump-started the integration.

Speaker 4: So NOCO and the Ball Metal Pact are a clear strategic partner.

Sonoco and the ball metal time, or a clear strategic fit.

The business complements our largest consumer packaging franchise, our iconic tan business and closure supervision.

Speaker 4: business complements our largest consumer packaging franchise, our iconic canned business and closures division.

Speaker 4: And combined, Sunoco's can-making operations are expected to produce approximately $2.4 billion in global sales this coming year.

Buying Sunoco scan, making operations are expected to produce approximately $2 $4 billion in global sales this coming year.

This combination allows us to progress towards our objective of fewer bigger and better businesses and our focus on stable defensive high cash flow businesses. We're extremely excited to welcome 1300 experienced associated.

Speaker 4: This combination allows us to progress towards our objective of fewer, bigger, and better businesses and our focus on stable, defensive, high cash flows.

Speaker 4: We're extremely excited to welcome 1,300 experienced associated.

Speaker 4: associates into the Sunoco family, and I personally have had the opportunity to visit each of the eight facilities since the closing to help kick off the integration process.

Associates answer the Sonoco family.

And Unfortunately, I've had the opportunity to visit each of the eight facilities since the closing to help kick off the integration process.

Speaker 4: There is a lot we have in common, including incredibly talented and experienced teams who are operating well-invested, state-of-the-art equipment utilizing the latest technologies.

There's a lot we haven't com, including incredibly talented and experienced team will operate well invested state of the order equipment utilizing the latest technologies. We've also have an opportunity to speak with many of our new customers.

Speaker 4: Many already know Sunoco and they are pleased to be working with an experienced global food

Many already know Sunoco and they are pleased to be working with an experienced global food packaging company.

Speaker 4: The Ball Metal Pack name has been changed to Sunoco and the business's financial results are expected to be reported in our consumer packaging segment.

<unk> nine has been changed to Sunoco and the businesses financial results are expected to be reported in our consumer packaging segment.

Speaker 4: Jim Peterson, a 15-year leader in the industry, is remaining as president of the business and tenured manager.

Jim Peterson, a 15 year leader in the industry is remaining as president of the business.

And tenured management team also plans to remain weak.

Speaker 4: We've brought in a third-party expert to assist us in the integration process and to focus us on achieving the realistic synergy target of $20 million of savings.

We brought in a third party expert to assist us in the integration process and are focused on achieving the realistic synergy targets of $20 million of savings over the next three years.

The key focus of our integration is keeping people force mentality.

Speaker 4: The key focus of our integration is keeping a people-first mentality, maintaining...

Maintaining stable operations and meeting our financial targets, we have laid out today, while sustaining a high level of customer satisfaction.

Speaker 4: and meeting the financial targets we have laid out today while sustaining a high level of customer satisfaction.

Speaker 4: Closing we're extremely optimistic entering 2022 that our core consumer and industrial businesses are well positioned to achieve a 20 percent year over year improvement and base earnings per.

In closing, we're extremely optimistic entering 2022 that our core consumer and industrial businesses are well positioned to achieve a 20% year over year improvement in based on earnings per share.

As far as business activity, we have seen a very strong start in January across our entire portfolio.

Speaker 4: As far as business activity, we have seen a very strong start in January across our entire portfolio.

Speaker 4: Demand for our global industrial products have recovered, and several of our businesses and the all-other group, which have been impacted by supply chain interruptions, are seeing improvement.

Demand for our global global industrial products have recovered and several of our businesses in the all other group, which have been impacted by supply chain interruptions are seeing improvements and we're continuing to take actions to improve productivity and profitability.

Speaker 4: We continue to take actions to improve productivity and profitability.

Speaker 4: Finally, our pharma safe cold chain packaging business remains busy in the first quarter providing temperature assured shippers for transporting COVID.

Finally, our <unk> cold chain packaging business remains busy in the first quarter, providing temperature assured shippers for transporting COVID-19 vaccine.

Our efforts to recover higher costs continue to gain traction we implemented necessary price increase increases effective January one.

Speaker 4: Our efforts to recover higher costs continue to gain traction. We implemented necessary price increases effective January 1st.

Speaker 4: And we recently announced additional price recovery efforts to go into effect in March.

And we've recently announced additional price recovery efforts to go into effect in March in both industrial and our consumer businesses. We will remain diligent to stay ahead of the five Gulf curve and expect strong cost recovery.

Speaker 4: We will remain diligent to stay ahead of the price-cost curve and expect strong cost recovery as the year progresses.

Year progresses.

So that goes purpose better packaging better life.

Speaker 4: So Narco's purpose is better packaging, better life. This means we're committed to creating sustainable packaging solutions that help build our customers.

This means we're committed to creating sustainable packaging solutions that help build our customers' brands and help enhance their product offerings and improved the quality of life for people around the world. We remain committed to returning cash to our shareholders and believe our value creation strategy.

Speaker 4: help enhance their product offer.

Speaker 4: improve the quality of life for people around the world.

Speaker 4: We remain committed to returning cash to our shareholders and believe our value creation strategy will make Sunoco better.

We will make some opening better than ever.

Now with that operator, we would be pleased to review any questions.

Speaker 4: Now, with that operator, we would be pleased to review any questions, and if you would...

And if you would go through the Q&A procedures.

Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

Speaker 1: Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star then one on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask the question. Please stand by while we compile the Q&A roster.

Withdraw your question press the pound key.

Again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Our first question comes from the line of Mike <unk> with Seaport Research. Your line is open.

Speaker 1: Our first question comes from the line of Mark Weingart with Seaport Research. Your line is open.

Speaker 5: You mentioned at the end of December there was some slowing at least in some of the businesses and yet you're also talking about January now being very strong.

Thank you. Thank you first for the very thorough details etc.

Question. One was you mentioned at the end of December there was some slowing at least in some of the businesses and yet you're also talking about January now being very very strong.

Speaker 5: Could you get a little bit more color perhaps on what that shift has been and if there's any more specificity in terms of volumes or whatever else might be useful for us to gauge?

Could you give a little bit more color perhaps.

What that shift has been and if theres any more specificity in terms of volumes or whatever else might be useful for us to gauge how strong January is coming out that would be terrific and then just the second question maybe somewhat Relatedly is Scott you also in your 2022 guidance laid out some very impressive step up in EBIT.

Speaker 5: how strong January is coming out. That would be terrific. And then just the second question, maybe somewhat relatedly.

Speaker 5: You also, in your 2022 guidance, laid out some very impressive step-up in EBITDA expectations.

Our expectations pretty big range. The nine tenths of the 960, what would be the key determinant do you think on where you are likely to come out on that range is it mostly on the volume side is it on.

Speaker 5: Pretty big range though, the $910,000 to the $960,000. What would be the key determinant, do you think, on where you're likely to come out on that range? Is it mostly on the volume side? Is it on the amount of pricing you get relative to the cost? What do you think is the key driver in where you're likely to come out in that range ultimately? Thanks, Mark.

The amount of pricing you got relative to cost. So what would you think that the key driver.

You are likely to come out in that range ultimately.

Thanks Mark.

I appreciate you joining us.

Speaker 4: Appreciate you joining us. Let me say at the end of December December was a bit of a surprise. You know we came into our analysts day expecting a relatively strong second half of December and we saw just the opposite. We saw a pullback most of which I will say it was related to COVID-19 and or supply chain issues that our customers were feeling.

Let me say at the end of December December was a bit of a surprise when we came into our analyst day expecting a relatively strong second half of December and we saw just the opposite resolved pullback most of which I will say is related to COVID-19 .

And or supply chain issues that our customers are feeling so we have some specific situations.

Speaker 4: We had some specific situations that that surprised us where customers could not source the necessary.

That surprised us where customers could not.

For us the necessary raw materials they needed.

Speaker 4: So, yes, we saw December slow down and felt like it was an anomaly related to the supply chain type issues that we all are fully aware of.

So yes, we saw December slowdown and felt like it was an anomaly related to the supply chain type issues.

We all are fully aware of as we entered January .

Speaker 4: As we enter January , you know, that was my comments were really in December around specific unique customers. But as we enter January , we're strong in every portion of our business and almost on a global basis. So we're seeing good volume. But of course, as we've talked over and over again, price is, is really starting to roll in.

That was my comments were really in December around specific unique customers.

We arent January were strong in every port.

<unk> of our business and almost on a global basis.

We're seeing good volume.

But of course, as we've talked over and over again.

Prices is really starting to roll.

And we're sorting as Julian noted enough in my commentary noted that.

Speaker 4: starting, as Julie noted, and my commentary noted that.

Speaker 4: first time price positive positive was in was in December and we're seeing that role in a more significant and meaningful way as we enter this way into this year. So we haven't closed January . It'll be another day or two. But what we're looking at right now a strong volume supported but really nice pickup.

The first on price cost.

Positive.

December and we're seeing that role more significant and meaningful way as we enter this one this year. So we haven't closed January there'll be another day or two but what we're looking at right now strong volumes supported with really nice pick up in terms of.

Speaker 4: price. You know, in terms of the EBITDA for next year, I'd say, you know, I could bucket it to really two main categories. Yes, price cost.

Price.

In terms of the EBITDA for next year I would say that could bucket is really two main categories, yes price call.

Speaker 4: finally getting caught up to where we need to be, and productivity is going to be strong in general.

And finally getting caught up to where we need to be.

And productivity is going to be strong in general for next year.

Speaker 4: So those are the two drivers and of course the incremental improvement coming from Baldwin.

So those are the two drivers.

And of course, the incremental improvement coming from ball metal time.

Great and maybe one last follow up on the on the kind of volume expectations organic.

Speaker 5: Right. And maybe if it's fair, one last follow-up on the kind of volume expectations organic, so not with a ball metal pack, what do you think is a reasonable starting point for expectations?

Not with Paul <unk>, what do you think is a reasonable starting point for expectation.

Speaker 4: include. Well right now for the legacy we're looking at a very modest 1 percent across the board.

Well right now for the legacy we're looking at a very modest 1% across the board.

Speaker 4: And that's that's going to vary among the three segments that we have today the fall, you know We're expecting that the food can business is going to see a slight kick downward But what's interesting about this acquisition is 35% of the turnover? Represents aerosol where we are seeing an actual pretty nice recovery As we go into the year

And that's going to vary among the three segments that we have today with ball.

We're expecting episodes can business is going to see a slight tick downward.

But what's interesting about this acquisition is 35% of the two.

Turnover.

<unk> represents the aerosol, where we are seeing actual pretty nice recovery.

As we go into the year.

Speaker 4: This year, as somewhat surprising the COVID impact as we looked at at our participation in similar markets being our adhesives and sealants, the center of the isles and and the big box.

This year is somewhat surprising the COVID-19 impact as we looked at it.

Our participation in similar markets.

<unk> and sealants the center of the aisle.

And the big box.

Retail outlets.

The acquisition of participant participates heavily there as well and last year.

Speaker 4: The acquisition participates heavily there as well. And last year, there was so much supply chain disruptions and discreet chemicals, et cetera, that we're seeing good recovery on the acquisition side, and we're seeing good recovery on a parallel basis in our adhesives.

There was so much supply chain disruptions and discrete chemicals et cetera that that we're seeing good recovery on the acquisition side and we're seeing good recovery on apparel basis in our adhesives and sealants.

No.

Maybe more than what your asphalt, but about 1% and were saying that ball.

Speaker 4: Maybe more than what you asked for, but about 1%, and we're saying that the ball in total between aerosol and food are going to be up, but up slightly. Much appreciated. I'll turn it back over to you.

Total between aerosol and food are going to be up slightly.

Much appreciate it I'll turn it over thank you.

Thank you.

Our next question comes from the line of George Staphos with Bank of America. Your line is open.

Speaker 1: Our next question comes from the line of George Stathis with Bank of America. Your line is open.

Speaker 2: Hi, everyone. Good morning. Thanks for all the details. Congratulations on closing the acquisition. I want to just maybe if we could take a different tack on sort of the earnings guidance for the year. Correct me if I'm wrong. I want to say that

Hi, everyone. Good morning, Thanks for all the detail.

Congratulations on closing the acquisition.

I wanted to just maybe if we could take a different tact on sort of the earnings guidance for the year.

Correct me, if I'm wrong I want to say that.

Speaker 2: Going into this year, the guide was for around $3.90. That was on the prior.

<unk> entered this year as a guide was for around 390 that was on the prior year.

Speaker 2: uh... base and then we're at uh... you know basically four sixty four eighty can you help us parse between the amortization ad back the improving volumes and productivity in the legacy and the ongoing you know ball metal pack we're now sunoco metal packaging how you bridge from what was the prior guide uh... to the current uh... and then i had uh... one quick follow on it and then one sort of bigger picture question

Base and then were at Bay.

Basically four six to 480 can you help us parse between the amortization add back.

Improving volumes and productivity in the legacy and the ongoing ball metal pack, we're now Sunoco metal packaging, how how you bridge from what was the prior guide.

The current and then I had one quick follow on and then one sort of bigger picture question.

Speaker 3: Great. I'm going to ask Julia to handle the question. Absolutely. Hi, George. Yeah, so you're right. Really, the starting point is for the legacy business and what we talked about in December , which is the $3.90 for this year. The add-back of the amortization for the legacy business is $0.35, right? So that's about $46 million of amortization expense pre-tax.

Right.

Julia.

Absolutely, Yes, hi, George.

So youre right the really the starting point is for the legacy business and what we talked about in December which is the $3 90.

For this year.

The add back of the amortization for the legacy business is 30.

$6 million of.

Amortization expense pre tax.

Speaker 3: Then we layered in our estimate for metal pack, call it a midpoint-ish, of 45 cents. So again, that is excluding any amortization related to the purchase accounting, which obviously is very much still in process. So anything embedded in that related to purchase accounting, you know, is a best estimate at

And then we've layered in our estimate for metal pack call. It a midpoint ish.

45%, so again that is.

Excluding any amortization related to the purchase accounting, which obviously is very much still in process.

Anything embedded in that related to purchase accounting.

Best estimate at this point.

Speaker 3: I guess what's important to note there is that 45 cents does include the incremental interest expense that we've estimated for the funding of the acquisition.

I guess, what's important to note there is that 45%.

It does include the incremental interest expense that we estimated for the funding of the acquisition. So on a gross basis and pre tax net interest expense is kind of in that $35 million range or about 25 per share.

Speaker 3: So on a gross basis, as in pre-tax, that interest expense is kind of in that $35 million range, or about $0.25 per share. And so, anyway, so when you piece all that together, again, the $3.90 plus the $0.35, that gets you to an adjusted legacy Sinoco of $4.25.

So anyway. So when you piece all that together again, the 390, plus a three plus a 35% that gets you to an adjusted legacy Sunoco of $4 25, and then again our estimate right now call. It midpoint of a range is 45.

Speaker 3: And then, again, our estimate right now, call it midpoint of a range, is $0.45, again, net of interest, and including our estimated purchase accounting now for metal pack, and again, all up to $0.46.

Net of interest and including our estimated purchase accounting now.

For metal pack and again, all up to $4 70.

Speaker 2: Thanks, Julie, I guess within that so you wind up more or less in the middle of the range

Thanks Julie.

Within that so.

Wanted to more or less in the middle of the range.

Speaker 2: uh... and yet you've had a really good start to the year which would suggest that at this juncture, and I don't want to put words in your mouth, you're probably trending to the upper end of your range.

Yes.

And yet <unk> had a really good start to the year.

Suggest that at this juncture I don't want to put words in your mouth.

We're probably trending to the upper end of your range I recognize it's only February it's not December .

Speaker 2: I recognize it's only February , it's not December , but what are you, if you will, putting some, if you agree with the premise, putting some cushion in your model for.

What are you if you will putting some if you agree with the premise putting some cushion in your model for.

Speaker 2: relative to only being in the middle of the range when it looks like you're starting out, kind of with an upward bias, if you will. And then my bigger picture question...

Relative to only being in the middle of the range when it looks like Youre, starting out kind of with a kind of an upward bias. If you will and then my bigger picture question.

Speaker 2: you know, recognizing, you know, that SMP is an add-on to your CAN business.

Recognizing.

Yes.

<unk> is an add on to your can business.

Speaker 2: you know the former owner uh... number years ago when they bought u.s. can you know fat which got them into number one position with aerosols

The former owner a number of years ago, when they bought U S can.

That which got them into the number one position with aerosols.

Speaker 2: had a bit of a learning curve on the aerosol business and with that customer base, are there any contract renewals or are there any change in control provisions that you have to be mindful of? And just tell us in general, you know, is there anything different about the go-to-market and the contractual piece of that business?

<unk> had a bit of a learning curve on the aerosol business in with that customer base are there any contract renewals are on there or any change of control provisions that you have to be mindful of and just tell us in general.

Is there anything different about the go to market and the contractual piece of that business.

Speaker 2: you know that maybe you want to provide some cushion for that we should be you know monitoring over time thank you guys and good luck in the quarter

Maybe you want to provide some cushion for that we should be.

Monitoring over time, Thank you guys and good luck in the quarter.

George I wish I could take great months and multiply it by 12 and tell you what the year's going away.

Speaker 4: Thanks, George. I wish I could take a great month and multiply it by 12 and tell you what the year is going to look like. That's what we do, Howard. I know that's what you guys do. It feels good to start out the year. If I look through the quarter,

That's what we do Howard.

I know that's what you got.

We.

Look it feels good to start out the year.

As I look through the quarter.

We're very bullish let's put it that way.

Speaker 4: We're very bullish, let's put it that way, but who knows what's going to happen, be it macroeconomics in general, Omicron, or the next variant, it's just really hard to say, so I'm just going to simply say, let's stick with our midpoints.

Yeah.

Who knows what's going to happen in the macro economics in general.

The next area.

It's just really hard to say, so I'm just going to.

So it looks good.

The mid point.

And.

Speaker 4: And frankly, the other part of it is we have only earned literally.

Frankly, the other part of it is we have only.

Literally.

Speaker 4: Ball metal pack two weeks to the day. So we've got some learnings there as well in terms of some of the assumptions I will say that that our deal model did overlay very nicely with what they internally were forecasting for the

All metal pack too.

To this day.

We've got some learnings there as well in terms of some of the assumptions I will say that that our deal model overlay very nicely.

And Tony were forecasting for the year.

Speaker 4: But we've got we've got work to do there as well. So I'd like to tell you that that that we're way on the upside, but You know, I don't think that would be responsible at this point in time where we are in the year

But we've got we've got work to do there as well.

I'd like to tell you that.

On the upside but.

No I don't think that would be responsible at this point in time, where we are on the year.

Speaker 4: So, on the aerosol side, you know, first as it relates to the contract, it's in good shape there. They've got, first off, multi-decade relationships with all of the major companies.

On the aerosol.

First as it relates to the complex good shape there.

First of all.

Multi decade.

License shifts with all of the major customers.

Speaker 4: There are no major contracts that we're looking at at least.

There are no major contracts.

But we're looking at at least in 2022.

Speaker 4: And, frankly, when you talk about change of control, no issues there as well.

And frankly.

Talking about change of control issues, there as well.

Speaker 4: Probably more importantly is that we look at the customer base on the aerosol side, and I keep going back to it, but we don't talk about that much, but that's the caulking cartridges. I'll name a brand, maybe I shouldn't, but it's Liquid Nails that has the caulking cartridges.

Alright more.

Importantly, as we look at the customer base on the aerosol side and I think.

We keep going back to it.

Since we don't talk about that much but.

That's the coffee and cartridges off I'll name, a brand, maybe I shouldn't but liquid nails.

Sure.

Speaker 4: fine or adapt my product. You know we are the largest player in that segment. And as I as I link the customer base.

Line or a debt problem.

We are the largest player in that.

Segment.

As I'd link the customer base.

Speaker 4: on the aerosol side, it's an impressive number of same.

The aerosol.

It's an impressive number of St.

So effectively we're walking into in our Montney.

Speaker 4: So, you know, effectively, we're walking into, and I will not name customers, but we're walking into.

Or walking into.

Speaker 4: These major CPGs that we know extremely well, that have had, in our case, a multi-decade relationship, with a great deal of appreciation and support when we walk in these doors. And frankly, I can say that on the food chain.

This measure.

We know extremely well with that have had.

Case, multi decade relationship with a great deal of appreciation and support in.

And frankly, I can say that on the food can side when we walk in and these are customers.

Speaker 4: We walk in. These are customers that they know they don't know us from our non-process can supply or closure service. They know us from our flexible service. They know us from our plastic service.

No.

All of them are all non process.

Can supply our closures business I know from our flexible business I know from our plastics businesses.

So when you walk in.

Speaker 4: walk in, I can just simply say that every customer that I've spoken to, Roger Fuller has spoken to, more than his fair share, they are extremely excited to see Sunoco enter this part of their supply chain. Thanks for the thoughts, Howard. Thank you, Howard. Thank you, Roger. Thank you, Julie. Thanks. Thank you.

I can just simply say that every customer that I've spoken to Rodger Fuller has spoken to.

More than his fair share there.

Frankly excited to see Sanofi.

Sure.

This part of their supply chain.

Thanks for the thoughts Howard. Thank you Howard. Thank you Roger Thank you Julien.

Thank you.

Our next question comes from the line of Adam Josephson with Keybanc. Your line is open.

Thanks, and good morning, everyone hope you're well.

Howard or Julie can you just update us on the ball metal pack sales and profitability when you announced the deal.

Speaker 4: Howard or Julie can you just update us on the ball metal pack sales and profitability when you announced the deal. I think estimated sales last year were 850. You said this morning they were 837. Was the EBITDA in line with what you expected.

<unk> estimated sales last year were 850.

You said this morning. They were 837 was the EBITDA in line with what you expected.

Speaker 6: in your acquisition presentation above, below, and then how much growth in EBITDA are you expecting in that business this year in terms of EBITDA, just as part of the

In your acquisition presentation above below and then how much growth in EBITDA are you expecting in that business. This year in terms of EBITDA, just as part of the <unk>.

Speaker 6: 45 cents of acquisition accretion that you're expecting after adding back amortization.

<unk> 45 cents of acquisition accretion that you're expecting.

After adding back amortization.

Speaker 4: Adam, I'll touch on the first part, and Julie can get into the numerical side of your question.

I'll pass on the first part.

Until they can get into the numerical side of your question, but.

Yes.

We announced based off of off of their 2021 forecast.

But we have clear visibility.

What what's to come.

Speaker 4: And so that's really what we baked into our overall models and ultimate price. And a lot of that was around what I tried to get across during our announcement December 20th or so.

And so that's really what we baked into our.

Our overall models ultimate price.

A lot of that was around what I've tried to get across drawing on announcement December 20th or something.

And I just want to keep reminding that they have spent somewhere in the neighborhood of $200 million over the last three or four years of recapitalizing.

Speaker 4: keep reminding that they have spent somewhere in the neighborhood of 200 million dollars over the last three four years recapitalized.

Speaker 4: across the board, consolidating, recapitalizing, doing the right thing. Very impressed with how

Across the board consolidating recapitalizing and doing the right things very impressed with.

Oh Oh.

The business had been managed over prior years with that came a pent up productivity opportunities.

Speaker 4: business had been managed over prior years. With that came pent up productivity opportunities. I know that again when we announced when you're starting up new assets in the fourth quarter of the year they're not going to generate meaningful benefit in that in there.

I know that again, when we announce when you're starting up new assets in the fourth quarter of the year. They are not going to generate meaningful benefit in that year. So we saw that coming and we built that into the model.

Speaker 4: So we saw that coming. We built that into the model, talking about productivity, but there's also new customer acquisition as well that was capitalized, equipment starting up, that they weren't seeing the benefit last year that we clearly were able to identify and see that benefit.

I'm talking about productivity, but there's also new customer acquisition as well.

That was capitalized equipment, starting up that they werent seeing the benefit last year that.

We clearly were able to identify and see that benefit coming up in three years.

Speaker 4: It was a combination of things that yes when we announced the multiple look high you know on a base after tax benefits it was more reasonable. Then we compared it with what we saw the go forward look like and it became an extremely reasonable price point for us to reach.

It was a combination of things that.

Yes, when we announced the multiple looked high.

On a base after tax benefits. It was more reasonable then we compare that with what we saw the go forward look like and it became.

An extremely reasonable.

The price point for us to reach so.

With that I'll ask Julie if you can give us some more firmer numbers.

Looking out here, yes, sure. Thanks Adam.

Speaker 3: Thanks Howard. Hi Adam. Yeah, you know, I mentioned in my comments our updated outlook for this year's sales are in that $7 billion.

I mentioned in my comments, our updated outlook for this year sales are in that $7 billion to $7 $3 billion range and so if again, if you think back to analyst day in December legacy Sunoco, we were around that $5 8 billion and so if you take that and I think now we'd say, that's probably hopefully a little on that.

Speaker 3: 7.3 billion dollar range and so if again if you think back to analyst day in December Legacy Sunoco we were around that 5.8 billion and so if you take that and you know I think now we'd say that's probably hopefully a little on the low side but nonetheless you know call it five eight to six billion Legacy Sunoco so then that you can imagine you know means that we're expecting for the new metal packaging business kind of in that

On the low side, but nonetheless, you know call. It five eight to 6 billion legacy Sunoco.

You can imagine means that we're expecting.

<unk> for that new metal packaging business kind of in that $1 $2 billion two.

Speaker 3: $1.2 billion to maybe slightly higher than that. And I guess just to remind everyone, of course, all these numbers we're talking about today for the acquisition are for 11 months.

Maybe slightly higher than that and I guess just to remind everyone of course all of these numbers, we're talking about today for the acquisition of for 11 months and so.

Speaker 3: And so, again, these are not full year numbers, but they're close to full year numbers.

So again.

Again these are not full year numbers, but they are close to full year numbers.

Speaker 3: And then, you know, just kind of moving into EBITDA, and I don't know that we've said this really yet, but, again, you know, really, because of various things that Howard just mentioned, kind of in that, from the acquisition, adding in, in that kind of $130 million range of EBITDA. And, again, that's on top of kind of, you know, 8 to 810 that we're expecting from the legacy business.

And then just kind of moving into EBITDA and I don't know that we've said this really yet but again.

Really.

Because of various things that as Howard just mentioned kind of in that from a from the acquisition, adding in that kind of $130 million range of EBITDA and again, that's on top of kind of eight to 810 that we're expecting from the legacy business.

Thanks Julien.

Speaker 6: Thanks, Julie. And just related to that, that $130, does that embed any kind of one-time price cost benefit? Obviously, template prices are going to be up.

Related to that that 130 does that embed any kind of onetime price cost benefit obviously tin plate prices are going to be up.

Speaker 6: huge amount this year. Can you just help us with the whole price cost issue? How much of the expected growth from 21 to 22 in terms of EBITDA is price cost and is that sustainable? Just can you help us understand that issue just given what some of the other companies in the sector are reporting along those lines?

Huge amount. This year can you just help us with the whole price cost issue how much of the expected growth from 'twenty one to 'twenty two in terms of the EBITDA is price cost and is that sustainable just can you help us understand that issue just given what some of the other companies in the sector reporting along those lines.

Speaker 4: Yeah, Adam, you know, first off, super hyperinflation across steel, across aluminum, frankly, others that we saw through the year, but also there was a huge supply chain issue as well in terms of inventory and inventory availability. There's certainly some of that in here, but as I look across the company, we have that

Yes, Adam.

First of all.

Super Hyperinflation.

Across deal costs alone frankly.

All of those that we saw through the year.

But also there was a huge supply chain issue as well in terms of inventory and inventory availability. There is certainly some of that in here.

But as I look across the company.

Have that.

Speaker 4: And our can business, our legacy business, as well as others.

In our can business, our legacy business as well as others.

Speaker 4: As I said earlier, we've owned the business for two weeks. Definition of how this is all going to materialize.

As I said earlier, we've owned the business for two weeks definition of how this is all going to materialize.

Speaker 4: We'll be learning as we go, there'll be some benefits for sure, but again, I want to take you back to my earlier comments about the pending pent-up opportunities that are ahead of us from a go-forward basis, and I'm talking about into late 2022, 2023, that are going to continue to produce the type of numbers that we've modeled.

We'll be we'll be learning as we go and there'll be some benefit for sure.

But again I want to take you back to my earlier comments about the pending.

Opportunities that.

That are ahead of us from a go forward basis, and I'm talking about into late 2022, 2023, and we're going to continue to produce.

The type of numbers that we've modeled through the acquisition process.

Alright, I appreciate that and just Julie one last one can you just back to George's question about the bridge from your last guidance did your base business assumptions change.

Speaker 6: Appreciate that. And just, Julie, one last one. Can you just back to George's question about the bridge from your last guidance? Did your base business assumptions change at all from the 390 to the 470 at that point? And if so, can you help quantify that at all?

At all from the $3 90 to $4 70 at the midpoint and if so can you help quantify that at all.

Speaker 3: Yeah, you know, really not dramatically. I mean, we did have maybe minor moving pieces around our buckets, but, you know, we've already talked about, you know, our sales volume growth is still around that 1%. You know, we remain very bullish about price costs, but, you know, we've, we've baked that into the guidance. And so, you know, really materially. No, we're pretty much aligned still with what we talked about in December .

Yes, really not dramatically I mean, we did have mitre moving pieces around our buckets, but as we've already talked about our sales volume growth is still around that 1%.

We remain very bullish about price cost but.

We've baked that into the guidance and so really materially no.

Much aligns still with what we talked about in December .

Thanks, so much Julie.

Thanks Al Thank you.

Our next question comes from the line of gas Ham Punjabi with Baird. Your line is open.

Speaker 1: Our next question comes from the line of Gansham, Panjabi with Baird. Your line is open.

Speaker 5: Yeah, thank you. Julie, maybe just as a follow-up to Adam's question on the guidance construct, so in your December meeting, I think you pointed towards 25 cents contribution from favorable price cost.

Yes. Thank you.

Julian maybe just as a follow up to Adam's question on the.

The guidance construct so in your December meeting I think you pointed towards 25 contribution from favorable price cost.

Speaker 5: You know, I know it's early in the year, but, you know, oil has moved up and many others are calling out inflation pressures, whether it's labor and so on. And I'm just curious, on the price cost, has that assumption changed materially, just given what you're seeing at this point with, you know, energy inflation? And then productivity of 31 cents, you know, post-Omicron, has that changed at all?

I know it's early in the year, but oil has moved up.

Many others are calling calling out inflation.

<unk>, whether it's labor and so on and I'm just curious on the price cost has that assumption changed materially just given.

What youre seeing at this point with energy inflation, and then productivity of 31 poster.

Posted on Micron has that changed at all.

Any significance.

Yes, no again, I would just really say not materially we're still.

Speaker 3: Yeah, no, again, I just really say not materially. We're still, I think, you know, we're obviously watching inflation very closely and obviously it's gonna continue this year, but so do our pricing increases.

We're obviously watching inflation very closely and obviously, it's going to continue this year, but so do our pricing increases again across the business, both contractually and open markets. So we've already had really quite a few.

Speaker 3: Again, across the business, both contractually and open market, so we've already had really quite a few price increases as we've started this year, and a lot of that was expected.

Price increases as we've started this year and a lot of that was expected so.

Speaker 3: Yes, again, I'm going to say, as we sit here today, no, the same, you know, your $0.25, your $0.31 are still good estimates for those earnings drivers.

Yes, again, I'm going to say as we sit here today no. These same you're 25 or 31.

Are still a good estimates for for those earnings drivers.

Speaker 5: Thank you. And maybe a question for Howard, you know, in context of consumer inflation, which is pretty significant, you know, highest in 40 some odd years, you have a large consumer portfolio. Yes, it's, you know, very much aligned towards consumer staples. But as you think about the sub-verticals within your consumer business, including Ball, how do you see this sort of playing out in terms of any impact from elasticity as your customers are also pushing through these very, very significant increases on the price?

Thank you and maybe a question for Howard in context of consumer inflation, which is pretty significant highest in 40, some odd years.

You have a large consumer portfolio, yes, it's very much aligned towards consumer staples, but as you think about the sub verticals within your consumer business, including ball.

How do you see this playing out in terms of any impact from elasticity.

As your customers are also pushing through these very very significant increases on the pricing side.

Speaker 4: You know, really, Johnson, it's hard to say. What I will say is that, you know, when Wallet's

Really it's hard to say.

What I will say is that when when wallets.

Speaker 4: Spending capacity of individuals decreased we'd normally benefit from that in terms

The spending capacity of individuals' decrease we'd normally benefit from that in terms of lesser than that.

Speaker 4: Less eating at home, more consumption, I mean, excuse me, away from home, more consumption at home.

More consumption I mean, excuse me away from her more consumption at home.

<unk>.

Speaker 4: But I really don't know how that's all going to play out.

But I really don't know how thats all going to play out.

Speaker 4: But again, if worst-case scenarios happen and we fall into a much slower type economic environment,

But again, if the worst case scenarios happen then we fall into <unk>.

Slower times economic environment.

Speaker 4: Typically find that that's a that's a positive for the the

You typically find that.

That's a positive for the.

Products in our portfolio.

Speaker 4: You know, people are going to walk away because, look, everything's relative, right? Everything is in place.

And I don't think we're going to walk away because.

Everything's relative right everything is inflating.

So we don't see it from a from a share position as much as we're going to see more consumption.

Speaker 4: So we don't see it from a share position as much as, oh, we're going to see more consumption from value drivers, from people buying.

From value drivers for people buying.

In retail versus economics.

Okay. Thanks, so much.

Speaker 1: Thank you, our next question comes from the line of Josh Spector with UBS, your line is open.

Thank you. Our next question comes from the line of Josh Spector with UBS. Your line is open.

Hi, Thanks.

Speaker 7: One on free cash flow, just curious what would be your expected uses for the next few years? Your guidance alone has you kind of getting down to the high twos from a leverage perspective. Do you feel the need to pay down gross debt from here or do you use cash elsewhere?

Hey, Thanks for taking my question.

So just one on free cash flow just curious what your what.

What would be your expected uses for the next few years I mean your guidance alone has you're kind of getting down to the high twos from a leverage perspective do you feel the need to pay down gross debt from here or do you use cash elsewhere.

Speaker 4: You know, our priorities are fairly similar. CapEx, as we've already defined through the opening narrative.

Our priorities are fairly similar capex.

Capex as we've already defined.

Opening narrative.

Speaker 4: Dividend is extremely important to us, and we are going to be focused, as Julie noted, our ratings have maintained themselves, and we intend to pay down debt and reload powder at this point in time. So it's one of those three categories, capex, dividend, and dividend.

Dividend is extremely important to us and we are going to be focused.

We noted.

Our ratings or maintain themselves and we intend to pay down debt and we load powder at this point in time, so it's really those three categories capex dividends and bringing down debt.

Speaker 7: Okay, thanks. That's helpful. And just on ThermoSafe, you guys know you're a record quarter. There's been a lot of movements over the past couple of years in terms of where that business goes. Just curious, based on what you're seeing in terms of new wins, and if we get to a point where there's, say, an annual vaccine for COVID or whatever that may be, does that grow the market significantly for you? Or because of the sales over the last year, it starts to become similar?

Okay. Thanks, that's helpful and just on Thermo Safe you guys noted a record quarter, there's a lot of movements over the past couple of years in terms of where that business. Just curious based on what youre seeing in terms of new wins and if we get to a point, where there are as you say an annual vaccine for COVID-19 or whatever that may be.

That grows the market significantly for you or because of the sales over the last year.

Become come similar.

Speaker 4: Yeah, Josh, this is Roger. Yeah, fourth quarter volume was strong. As we've already said, we should

Yeah, Josh this is Roger.

Yes fourth quarter volume was strong as we've already said.

We shipped over half a million.

Speaker 4: We're sold over half a million shippers for COVID vaccines in the quarter we expect.

<unk> sold over half a million shippers for Covid vaccines in the quarter, we expect that to continue into the first quarter.

Speaker 4: A lot of the current providers of the vaccines are looking at some kind of combined flu, COVID vaccine.

A lot of that.

Current providers of the vaccines are looking at some kind of combined blue Covid vaccine as you know we ship path.

Speaker 4: We ship half of the flu vaccines every year.

Flu vaccines every year in the United States and some in Europe . So we feel like that the teams went and good business in other areas around biologics.

Speaker 4: United States and some in Europe . So we feel like that's upside and the team's winning good business in other areas around biologics. We see that volume continue to be strong as we head into 2020.

We see that volume continues to be strong as we head into 2022.

Okay. Thank you.

Speaker 1: Thank you. Our next question comes from the line of Mark Wild with Bank of Montreal. Your line is open.

Thank you. Our next question comes from the line of Mark Wilde with Bank of Montreal. Your line is open.

Speaker 8: Good morning, Howard. Good morning, Julie. Roger. Thank you.

Okay. Good morning, Howard Good morning, Julie Roger Good morning.

Speaker 8: I wanted to just come back to food cans for a couple more minutes. First, Julie, is it possible for you to give us a sense of what your expectations are for both CapEx?

I wanted to just come back to food cans for a couple of more minutes.

Julian is it possible for you to give us a sense of.

Whats your expectations are for both Capex and for the food can volume piece of it.

Speaker 8: and for the food can volume piece of Sunoco metal packaging.

Sunoco.

Metal packaging.

Yes, I will say that we.

Speaker 3: Yeah, I will say that, you know, we have layered in $25 million into our kind of original $300 million guidance that we talked about in December . So you can imagine we're going to be actively starting to talk more about that with the metal pack management team literally next week. And I know Howard and Roger have already had some of those discussions.

We have layered in $25 million.

Our kind of original $300 million guidance that we talked about in December so.

Can imagine we're going to be actively starting to talk more about that with the metal Tech management team literally next week and Howard and Rodger have already had some of those discussions.

Speaker 3: So anyway, that's an estimate at this point, but we obviously want to be front footed, I guess, about, you know, investing in that business for growth and productivity, and then I'll turn it over.

So anyway, that's an estimate at this point, but we obviously are going to be.

Brett.

Put it I guess about.

Investing in that business for growth and productivity and then I'll turn it over to Howard fan I think volume a little more on volume Mark Mark.

Speaker 4: volume, a little more on volume, Mark? Mark, there's a question. What are we building in for volume for this year? Yeah.

Question, what are we building them for volume for this year, yes.

Speaker 4: Yeah, the foot cam side, I think slightly down, maybe 2%.

Yes, if I can.

I think it's slightly down.

Maybe 2%.

Speaker 4: from prior year and then on the aerosol side which as a reminder makes up about 45 percent of the business it's in that let's call it between 4 and 6 percent type of increase.

From prior year, and then on the aerosol side, which as a reminder, makes up about 45% of the business is in that let's.

Call it between 4% to 6% type of inquiries.

Speaker 4: As it relates to I shared earlier and frankly we didn't to repeat myself We correlated what we saw at our adhesives and sealants business with the lack of raw materials Availability last year same customers similar customers the bit of a reach

As it relates to shared earlier and frankly, we didn't have to repeat myself, we correlated what we saw at our adhesives and sealants business with the lack of raw materials.

Variability last year same customer similar customers a bit.

A bit of a rebound if you will on their cellphone.

Speaker 8: I guess, Howard, as a follow-up on that volume in food cans, two things strike me. One is that your biggest competitor in that market is pointing to basically mid-single-digit declines in 2022 because you had a huge year in 2020, and then you had a good follow-on year last year as Packers rebuilt inventory. The other element that I'm wondering about is I think that all metal packs

Yeah, I guess Howard I, just as a follow up on that volume in food cans two things strike me one is that.

Your biggest competitor in that market is disappointing to basically.

Single digit declines in.

<unk> 'twenty two because you had a huge year in 'twenty and then you had a quick follow on your last year's Packers rebuilt inventory and then the other element, but I'm wondering about is I think that all metal pack.

Speaker 8: sold a lot of cans last year to another competitor who has since added capacity. I'm just trying to figure out between the market being down and you not having these sort of third-party can sales this year to another player in the market, whether a 2% volume decline is enough of a volume decline.

Sold a lot of cans last year to another competitor who has since added capacity. So I'm just trying to figure out between the market being down.

Youre not having these sort of third party can sales this year to another player in the market, whether a 2% volume decline is enough of a volume decline.

Speaker 4: Yeah, I'm fully aware of that going into our discussions around this acquisition that there was a lack of available capacity and there was a large player out there by not only domestically but internationally.

Yes, I'm fully aware of that going into <unk>.

Our discussions around this acquisition that there was a lack of available capacity.

Large player out there by not only domestically but internationally.

Speaker 4: That's built into it. Now, as we look customer by customer and we look at share position and other opportunities, and I did note there's new volume that is directly related to food can, but not in the food can area.

That's built into it.

Now as we look customer by customer and we look at share position and other opportunities and I did note there was new volume.

That is directly related to food cans, but not in the.

Food can area.

What that was.

Speaker 4: counter way of answering a question but there's a new customer that has been picked up last year that we're still ramping up on and

Counter way of answering a question but.

There is a new customer that has been picked up last year that we're still ramping up on and.

Speaker 8: I'll just leave it at that. I don't want to get into too much detail about it. Yeah, that's fine. That's fine. Just one other thing about food cans, now that you own the business, how do you think about the potential for either further consolidation in North America versus growth outside of North America? And how far would you be willing to stretch for moves in either direction?

I'll just leave it at that I don't want to get too much detail about yes, that's fine that's fine.

Just just one other thing about food costs now that you own that business. How do you think about the potential for either further consolidation in North America versus growth outside of North America.

And how far would you be willing to stretch for moves in either direction.

Yeah.

Speaker 4: You know, Mark, great question. I think it's part of our attraction to the business that we do think it's important that that.

Mark Great question.

It's part of our attraction to the business that we do think is important.

That.

Speaker 4: for the industry. We saw the same thing frankly in our paper can business back in the 80s and 90s where a lot of folks were leaving the business because it was

For the industry. We saw the same thing frankly on our paper Cam business back in <unk>.

Sure.

Lot of folks.

Leaving the business because it wasn't core to them.

Speaker 4: We feel like there's opportunities for us to lean into this more, but our focus right now is leaning into the asset that we have just acquired. And we'll just see what happens. There's a lot of charm globally.

We feel like there's opportunities for us to lean into this more but our focus right now is leaning into the asset that we have just acquired.

And we'll just see what happens there is a lot of charm globally.

Speaker 4: But right now our focus is on the successful integration of the asset that we have had two weeks under our portfolio.

But right now our focus is on the successful integration of <unk>.

The assets that we have two weeks.

Under our portfolio.

Okay Fair in response, Thanks Howard.

Thanks.

Thank you as a reminder, ladies and gentlemen, Thats star one to ask a question.

Speaker 1: Thank you. As a reminder, ladies and gentlemen, that's star one to ask the question.

Speaker 1: Our next question comes from the line of Gabe Heath with Wells Fargo, your line is open.

Our next question comes from the line of Gabe <unk> with Wells Fargo. Your line is open.

Hey, good morning, Howard Rodger Julie.

Speaker 4: Good morning Howard, Roger, Julie. I hate to harp on Sunoco Metal Packaging yet again, but I'm kind of getting to or trying to understand, I guess, in the first quarter and looking at seasonality of

I hate to harp on this.

Sunoco metal packaging, yet again, but.

I'm kind of getting to or trying to understand I guess in the first quarter.

And looking at seasonality of.

Speaker 4: Sunoco historically, and that Q1 is typically the smallest earnings quarter, yet the implied guidance kind of seems to suggest lower earnings, and then again, this is kind of despite the fact that Q3 should be a little bit bigger with the vegetable harvest impact.

Sonoco historically and that Q1 is typically the smallest earnings quarter.

Yet the implied guidance seems to suggest.

Lower earnings and then again this is kind of despite the fact that Q3 should be a little bit bigger.

With the vegetable harvest impact.

Speaker 6: I'm curious, are you embedding anything in Q1 for metal gains or lower-cost inventory that got carried over that will be sold at a higher price in Q1?

I'm curious I guess I suppose. The question is are you embedding anything in Q1 for for metal gains or lower cost inventory that got carried over that will be sold at a higher price in Q1.

Speaker 3: Yeah, hey, Gabe. Yeah, absolutely. I mean, price cost in Q1 really is a key driver to profitability and our outlook. So, we obviously, we have an outlook preliminary for the balance of the year and again, are just beginning to scrub the metal packaging numbers.

Yeah, Hey, Gabe.

Yeah, absolutely I mean price cost in Q1 really is a key driver to profitability and in our outlook. So.

We obviously, we have an outlook preliminary for the balance of the year and again are just beginning to scrap metal packaging numbers really beyond Q1 would that team, but yes absolutely.

Q1 is very solid from a price cost perspective, and you are right about that rate we're bringing in.

Selling inventory that was purchased at lower prices last year, especially from a from a steel perspective so.

Speaker 4: So I'd say more to come as we continue sharpening our pencil with the new business and how we see that outlook for the year. But again, you are right that as we start the year, we have a lot of some nice price cost upside here in the first quarter. Yeah. And Gabe, let me just expand on that. And that's across our portfolio. So let me get back to, I think, a big part of your question was seasonality. One of the other aspects of this, if you look at our legacy non-process can business, it's strongest.

Yes, I would say more to come as we continue sharpening our pencil with the new business and how.

We see that outlook for the year, but again you are right that as we start the year.

We have a lot of.

So nice price cost upside here in the first quarter.

Goodbye.

Just expand on that and that's across our portfolio.

Speaker 9: So...

So.

No.

Speaker 4: But let me get back to, I think, a big part of your question was seasonality. One of the other.

Let me get back to I think.

A big part of your question with seasonality.

The other.

Speaker 4: aspects of this. If you look at our legacy non-process can business its strongest period is on the end of the third quarter beginning of the fourth quarter.

Aspects of this if you look at our legacy non process can business.

Strongest period is in the end of the third quarter beginning of the fourth quarter.

Speaker 4: That was not missed on us as we looked at the seasonality of this business. On the food side, Aerosol is fairly well flat throughout the year, but we're going to see a benefit, I think, from a seasonality perspective in the can business that will be stronger in those spring-summer periods where we are relatively weak.

That was not necessarily on us as we look to see.

The novelty of this business on the food and.

Aerosols for.

Charlie will flat.

The year that we're going to see a benefit I think from a seasonality perspective in the can business that will be stronger.

Spring summer periods, where were relatively weaker.

Speaker 9: and our legacy non-processed business. So actually, as we pull these two businesses together.

In our legacy non process businesses.

Actually as we pull these two.

Two businesses together, we see a more smoother relationship on.

Speaker 9: a more smoother relationship on an annualized basis.

On an annualized basis.

Speaker 9: All right. Thank you. And then I guess I know it's somewhat real time, but I've seen some announcements from some of the large auto manufacturers. I know it's a small business within all other, but turning off some some vehicle production and then with the trucker issues that we're seeing on the U.S. Canadian border, anything embedded in Q1 or I guess, again, real time thoughts on how it could impact that business and all other.

Alright. Thank you and then I guess I know, it's somewhat real time, but.

<unk> seen some announcements from some of the large auto manufacturers I know, it's a small business within all other but.

Turning off some vehicle production.

And then with the trucker.

Issues that we're seeing in the U S Canadian border.

Anything embedded in Q1, or I guess again real time thoughts on how it could impact.

That business in all other.

Speaker 9: This is Roger. We've got to have that included in our guys. We've been pretty conservative on the number of vehicles sold.

Okay. This is Roger.

We've got to have that included in our guidance, we've been pretty conservative on the number of.

Vehicles sold in the U S. As we rolled into 2022 based on our supply from our molded foam groups.

Speaker 9: 22 based on our supply from our molded foam group. So I wouldn't see any major impact to the first quarter but it is still a challenge. It is certainly still a challenge and we've also seen some challenges and the white goods industry which

See any major impact to the first quarter, but it is still a challenge because it's certainly still a challenge and we've also seen some challenges in the white goods industry, which is our paper based protective.

Speaker 9: a business that sells into the white goods industry. So we've seen some challenges there, but it's all built into the guidance. I don't think you'll see anything.

Business that sells into the white goods industry. So we've seen some challenges there but.

But it's all built into the guidance I don't think you've seen anything unusual.

All right. Thank you good luck.

Thank you.

Speaker 1: We have a follow-up from the line of Adam Josephson with T-Bank, your line is open.

We have a follow up from the line of Adam Josephson with Keybanc. Your line is open.

Tower, Julie Thanks for taking my follow ups, just one on back to the consumer businesses Howard how do you think about the COVID-19 .

Speaker 6: Howard, Julie, thanks for taking my call. It's just one on back to the consumer businesses. Howard, how do you think about the COVID?

Speaker 6: impact on demand in both the legacy consumer business.

Impact on demand in both the legacy consumer business.

Speaker 6: and the Sunoco Metal Pack business and how they might differ. And because we're obviously seeing CPG volumes normalized in recent months. And I'm just wondering if you think Sunoco Metal Pack was any greater a beneficiary from COVID than your your legacy consumer business and how that played into your your thinking in terms of the acquisition.

And the Sunoco metal pack business and how they might differ in because we're obviously seeing CPG volumes normalize in recent months and I'm. Just wondering if you think sunoco metal pack was any greater a beneficiary from COVID-19 than you are.

Our legacy consumer business and how that played into your thinking in terms of the acquisition.

Yeah.

It's hard for me to really.

Speaker 4: The answer to that, let me give it a quick thought here, what I would, well, what I would say is that we did see the strongest period.

Can I answer that let me give it a quick thought here what I would what I would say is that we did see the strongest period.

Speaker 9: I guess, in the mid last year or so, on our consumer.

I guess.

Mid last year or so on our consumer business.

Speaker 4: What we're happy with, pleased with, what we said at the time, is this a one-and-done. If we look and compare this coming year to 2019, we're actually seeing exactly what we had expected, well, what we had hoped. It was what our customers were telling us, that new consumers have now found the space, and there's going to be a sustainable future.

We're happy with pleased with what we said at the time is this a one and done.

Look and compare this coming year for 2019, we're actually seeing exactly what we would expect we would hope that with what our customers were telling us that new consumers have now.

Found.

Found the space.

And there's going to be a sustainable pick up then yes, we're still kind of <unk>.

Speaker 9: Yes, we're still kind of in COVID, but I'm really pleased to see that from 2019 to our forecast into 2022, we're actually, you know, ahead of where we historically have been. So that's kind of holding true. In fact, we also have, you know, certain businesses that continue to increase, such as our trade business,

I'm really pleased to see that from 2019 to our forecast into 2022 were actually.

Head of.

Where we historically had been so thats kind of holding true.

In fact, we also have.

Certain businesses that continue to increase such as our trade business.

Speaker 4: Related to that as well as new business awards and as it relates to the the metal side of the business

Related to that as well as new business awards and as it relates to the metal side of the business.

Speaker 9: You know, the multiple years we look back, there were a couple of categories that jumped significantly. You can think of products that were for disinfectants.

This multiple years, we look back there were a couple of categories that jump significantly you can think of products that were for disinfectant.

Speaker 9: And yes, those are going to come down and then we bottled those down accordingly to more traditional levels as we went through the

And yes, those are going to come down and we model those down accordingly to more traditional levels.

We went through the <unk>.

Due diligence parts of the acquisition so.

Yes.

Speaker 9: While we talked about what we expect for next year and feel very

I've already talked about what we expect for next year and feel very comfortable with that.

And I appreciate that and just one other question on the accounting change, which is what Youll report in terms of adjusted EPS as a form of cash EPS. If you will.

Speaker 6: And just one other question on the accounting change, which is, you know, what you'll report in terms of adjusted EPS is a form of cash EPS, if you will, you know, and obviously investors can see your, your free cash flow. So they know what, what, what you're doing in terms of free cash flow. So I guess why the need to report something like a cash EPS?

And obviously.

<unk> can see or your free cash flow. So they know what what what youre doing in terms of free cash flow. So I guess why the need to report something like a cash EPS.

Speaker 6: you know, which distorts, you know, P. E. multiple comparisons to where you've traded historically, as well as to some of your peers that have not made this change to exclude, uh, amortization.

Which distorts p/e multiple comparisons where you've traded historically as well as to some of your peers that have not made this change to exclude.

Amortization of acquisition intangibles.

Speaker 4: You know, when we looked at that, Adam, particularly as we surveyed and looked out at our consumer peer group and found that we're an anomaly and not.

When we look to that Adam.

Particularly as we surveyed and looked out at our consumer peer group.

Now that we are anomaly and not.

Speaker 4: reporting as we are starting to report. So I think it's important. I've actually seen analyst reports where comparing performances on a percentage basis over periods of time, and maybe not realizing that one is recognized and intangible and the other is not. So we just felt like we wanted to be aligned with, as we've grown our consumer business to over 50% of our portfolio, to be aligned in that.

As we are starting to report so I think it's important I've actually seen analysts' reports were comparing performances on a percentage basis over periods of time.

And maybe not realizing that one.

Recognizing the intangibles and the other is not so we just felt like we wanted to be aligned with as we've grown our consumer business.

Over 50% of our portfolio to be aligned in that way and in a secondary issue.

Speaker 9: And, you know, and a secondary issue is we really couldn't be talking to you intelligently about the impact of the BMP acquisition today, being two weeks into it and purchased accounting is not going to be completed for some period of time now. So it felt right in terms of aligning ourselves up with the rest of our peers, and it felt right to be able to have this conversation with you guys of how material we're looking at this acquisition today.

We really couldnt be talking to you intelligently about.

The impact of the BNP acquisition today being two weeks into it and purchase accounting is.

It's not going to be completed for some period of time now so it felt like in terms of aligning ourselves up with the rest of our peers.

And it felt like to be able to have this conversation with you guys.

How material were looking at this acquisition to date.

Got it thanks, so much Howard Silicon the corridor.

Great. Thanks.

Thank you.

Speaker 10: Thank you.

Speaker 1: I am showing no further questions in the queue. I would now like to turn the call back over to Roger for closing remarks.

I am showing no further questions in the queue I would now like to turn the call back over to Roger for closing remarks.

Speaker 8: Thank you again. Let me thank everybody for joining us today. We certainly appreciate your interest in the company, and as always, if you have any further questions, please don't hesitate to reach out.

Thank you again.

Let me thank everybody for joining us today, we certainly appreciate your interest in the company is always do you have any further questions. Please don't hesitate to reach out and contact us. Thank you.

Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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Speaker 1: Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2021 Sunoco Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 Sonoco earnings Conference call.

At this time, all participants on a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone please be advised that today's conference is being recorded.

Speaker 1: If you require any further assistance, please press star then zero. I would now like to turn the conference over to your speaker for today, Roger Shrum, Vice President Investor Relations. You may begin.

If you require any further assistance. Please press Star then zero I would now like to turn the conference over to your speaker for today, Roger Schrum, Vice President Investor Relations you may begin.

Thank you to Wanda and good morning, everyone and welcome to Sunoco fourth quarter and full year 2021 Investor Conference call.

Speaker 8: Thank you, Tawanda, and good morning, everyone, and welcome to Sunoco's fourth quarter and full year 2021 investor conference.

Speaker 2: Joining me today are Howard Coker, President and Chief Executive Officer, Roger Fuller, Executive Vice President, and Julie Albrecht, Vice President and Chief Financial Officer.

Joining me today are Howard Coker, President and Chief Executive Officer, Rodger Fuller Executive Vice President and Julie Albrecht, Vice President and Chief Financial Officer.

Speaker 12: A news release reporting our financial results was issued before the market opened.

A news release reporting our financial results was issued before the market opened today and is available on the Investor Relations website at Sonoco Dot com.

Speaker 12: and is available on the Investor Relations website at sunoco.com.

Speaker 12: In addition, we will reference a presentation on our fourth quarter financial results which was posted on the

<unk>, we will reference a presentation on our fourth quarter financial results.

Which was posted on the website this morning.

Speaker 12: Before we go further, let me remind you that today's call and presentation contains a number of forward-looking statements based on current expectations, estimates, and projections.

Before we go further let me remind you that today's call and presentation contains a number of forward looking statements based on current expectations estimates and projections.

Speaker 12: These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may vary.

These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore actual results may differ materially.

Speaker 12: Furthermore, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors.

Furthermore, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations.

Speaker 12: about the company's financial conditions and results of operation.

Speaker 12: Further information about the company's use of non-GAAP financial measures, including definitions as well as a reconciliation of those measures to the most closely related GAAP measure, is also available in the investor relations section of our website.

Further information about the Companys use of non-GAAP financial measures, including definitions as well as a reconciliation of those measures to the most closely related GAAP measure is also available in the Investor Relations section of our website.

Now with that I'm going to turn it over to Julie.

Speaker 3: Thank you, Roger. I'll begin on slide three, where you see that earlier this morning, we reported fourth quarter earnings per share on a gap basis of 66 cents and base earnings of 90 cents per share, which is the high point of our guidance range of 84 to 90 cents per share and eight cents greater than the base EPS we delivered in the fourth quarter of 2020.

Thank you Roger I'll begin on slide three where you see that earlier. This morning, we reported fourth quarter earnings per share on a GAAP basis of 66.

And base earnings of <unk> 90 per share, which is the high point of our guidance range of 84 to <unk> 90 per share and <unk> <unk> greater than the base EPS, we delivered in the fourth quarter of 2020.

Speaker 3: Our fourth quarter operational results were driven by favorable total productivity and importantly also by positive price costs.

Our fourth quarter operational results were driven by favorable total productivity and importantly, also by positive price cost.

Speaker 3: These factors were partially offset by unfavorable impacts from lower volume mix solely driven by four less shipping days in the quarter, as well as the divestiture of our displays and packaging business.

These factors were partially offset by unfavorable impact from lower volume mix solely driven by four less shipping days in the quarter as well as the divestiture of our display and packaging business.

Speaker 3: Now moving to our base income statement on slide 4 and starting with the top line, you see that sales were $1,439,000,000 up $63,000,000 or nearly 5% over the prior year period.

Now moving to our base income statement on slide four and starting with the top line you see that sales were $1.439 billion.

Up $63 million or nearly 5% over the prior year period.

Speaker 3: I will review more details about our key sales drivers on the sales bridge in just a moment.

I will review more details about our key sales drivers on the sales bridge in just a moment.

Speaker 3: Gross profit was $264 million, $11 million below the prior year.

Gross profit was $264 million $11 million below the prior year.

Speaker 3: This resulted in an 18.3% gross profit as a percent of sales compared to 20% in the fourth quarter of 2020.

This resulted in an 18, 3% gross profit as a percent of sales compared to 20% in the fourth quarter of 2020.

Speaker 3: SG&A expenses net of other income, or $143 million, an $11 million reduction year over year.

SG&A expenses net of other income were $143 million and $11 million reduction year over year.

Speaker 3: This decrease was expected and was mostly driven by different timing for incentive comp expenses in each year.

This decrease was expected and was mostly driven by different timing for extensive incentive comp expenses in each year.

Speaker 3: So all of this resulting in fourth quarter operating profit of $125 million.

So all of this resulting in fourth quarter operating profit of $125 million.

Speaker 3: I'll discuss the key drivers on the operating profit bridge in a few minutes.

I'll discuss the key drivers on the operating profit bridge in a few minutes.

Speaker 3: Net interest expense of $12 million was a $6 million reduction from the prior period due to lower debt balances and a lower average interest rate.

Net interest expense of $12 million with a $6 million reduction from the prior period due to lower debt balances and lower average interest rates.

Speaker 3: Income tax expense of $27 million was $1 million higher than the prior year's quarter reflecting our higher pre-tax earnings as our effective tax rate was relatively flat quarter over quarter.

Income tax expense of $27 million.

It was $1 million higher than the prior year's quarter, reflecting our higher pre tax earnings as our effective tax rate was relatively flat quarter over quarter.

Speaker 3: Moving down to net income, our fourth quarter 2021 base earnings were $89 million, compared to $83 million in 2020, an increase of approximately 7%.

Moving down to net income our fourth quarter 2021 base earnings were $89 million compared.

Compared to $83 million in 2020, an increase of approximately 7%.

Speaker 3: Now looking at the sales bridge on slide five, you see volume was lower by $38 million, or almost 3%.

Now looking at the sales bridge on slide five you see volume was lower by $38 million or almost 3% driven by our consumer and industrial segments and somewhat mitigated by stronger demand in our all other group of businesses.

Speaker 3: driven by our consumer and industrial segments, and somewhat mitigated by stronger demand in our all other group of businesses.

Speaker 3: It is important to note that we had four less shipping days in the fourth quarter prior to the fourth quarter of 2020, which reflects around a 6% headwind.

It is important to note that we had four less shipping days in the fourth quarter prior to the fourth quarter of 2020, which reflects around a 6% headwind.

Speaker 3: So adjusting to a same-day basis, our total volume mix actually increased by approximately 3%.

So adjusting to a same day basis, our total volume mix actually increased by approximately 3%.

Consumer packaging volume mix was down $22 million or almost 4%, but when adjusted for the same number of days. This segment's volume increased in the low single digits.

Speaker 3: consumer packaging volume mix was down $22 million, or almost 4%, but when adjusted for the same number of days, this segment's volume increased in the low single digit.

Speaker 3: This was driven by solid demand improvement in flexibles and plastics food, while global rigid paper containers was down slightly, as volumes did drop off in late December , as certain key customers were negatively impacted by COVID and supply chain issues.

This was driven by solid demand improvement in flexible and plastics food, while global rigid paper containers was down slightly as volumes did drop off in late December at certain key customers were negatively impacted by COVID-19 and supply chain issues.

Speaker 3: industrial packaging volume mix with down $26 million or almost 5%.

Industrial packaging volume mix was down $26 million or almost 5%.

Speaker 3: but actually higher by 1% to 2% when adjusting for the same number of days.

But actually higher by 1% to 2% when adjusting for the same number of days.

Speaker 3: On this adjusted basis, global tubes, cores, and cones experienced stronger demand, but this was mostly offset by lower volumes in our global paper operation.

On this adjusted basis global tubes cores and cones experienced stronger demand, but this was mostly offset by lower volumes in our global paper operations.

Speaker 3: Finally, our all-other group saw volume mix grow by almost 6%.

Finally, our all other group saw volume mix grow by almost 6%, but increased by an estimated 12% on the same day basis and all of this is adjusted to exclude the display and packaging divestiture.

Speaker 3: but increased by an estimated 12% on the same day basis. And all of this is adjusted to exclude the display and packaging divestiture.

Speaker 3: This stronger demand was driven by our industrial plastics and our thermo-safe design.

This stronger demand was driven by our industrial plastics and our service safety businesses.

Speaker 3: So moving down the sales bridge to price, you see that selling prices were higher year over year by $204 million as we continue to battle inflation globally.

So moving down the sales bridge to price you see that selling prices were higher year over year by $204 million as we continue to battle inflation globally around.

Speaker 3: Around two-thirds of this increase was recognized in our industrial segment driven by both contractual and open market prices.

Around two thirds of this increase was recognized in our industrial segment, driven by both contractual and open market price increases.

Speaker 3: Moving down to divestitures and acquisitions, you see a top-line negative impact of $88 million, which is driven by the divestiture of our former display and packaging business in the All Other Group.

Moving down to the divestitures and acquisitions you see a top line negative impact of $88 million, which is driven by the divestiture of our former display and packaging business in the all other group.

Speaker 3: And finally, the sales impact from foreign exchange and other was negative by $16 million, and the primary driver was the negative foreign exchange translation impact from the stronger U.S. dollar year-over-year.

And finally, the sales impact from foreign exchange and other was negative by $16 million and the primary driver was the negative foreign exchange translation impact from the stronger U S dollar year over year.

Speaker 3: Moving to the operating profit bridge on slide six and starting with volume mix, our lower sales volume driven by the four less shipping days and combined with the impact of mix had a negative impact on operating profit of $20 million.

Moving to the operating profit bridge on slide six and starting with volume mix, our lower sales volume driven by the four less shipping days and combined with the impact of mix had a negative impact on operating profit of $20 million.

Speaker 3: Next is the impact of total productivity, which added $14 million of earnings year over year with a favorable impact being predominantly in our consumer sector.

Net is the impact of total productivity, which added $14 million of earnings year over year with the favorable impact being predominantly in our consumer segment.

Speaker 3: Moving to price cost, I will remind you that this category includes the earnings benefit from higher selling prices, as well as the impact of total inflation.

Moving to price cost I will remind you that this category includes the earnings benefit from higher selling prices as well as the impact of total inflation.

Speaker 3: In the fourth quarter, we had $11 million of favorable price costs, with most of this impact falling in our industrial sector.

In the fourth quarter, we had $11 million of favorable price costs with most of this impact following in our industrial segment.

Speaker 3: As usual, there is a slide in the appendix that shows Southeast OCC official board market prices.

As usual there is a slide in the appendix that shows southeast OCC official board market pricing.

Speaker 3: There you'll see the trend of declining OCC prices during the fourth quarter of 2021 and this trend does continue in early 2021.

There you will see the trend of declining OCC prices during the fourth quarter of 2021 and this trend does continue in early 'twenty two.

Speaker 3: Moving to divestitures and acquisitions, you see that the divestiture of our former display and packaging business reduced operating profit by $10 million.

Moving to divestitures and acquisitions, you'll see that the divestiture of our former display and packaging business reduced operating profit by $10 million.

Speaker 3: Moving now to the segment analysis on slide seven, you see that consumer packaging sales were up by 3.3%, driven by higher selling prices, which were mostly implemented to offset cost inflation.

Moving now to the segment analysis on slide seven you see that consumer packaging sales were up by three 3% driven by higher selling prices, which were mostly implemented to offset cost inflation.

Speaker 3: Our consumer segment operating profits fell by 14.2 percent, driven by unfavorable price costs, as well as lower volume due to fewer shipping days. And both of these were partially offset by strong productivity results.

Our consumer segment operating profit fell by 14, 2% driven by unfavorable price cost as well as lower volumes due to fewer shipping days in both of these were partially offset by strong productivity results.

Speaker 3: Our consumer segment margin declined to 9.6 percent versus the fourth quarter of 2020 when their margin was 11.6 percent.

Our consumer segment margin declined to nine 6% versus the fourth quarter of 2020, when their margin was 11, 6%.

Speaker 3: Moving to our industrial segment, sales grew by 20.5% due to year-over-year price increases partially offset by lower volume solely due to the fewer days in the period.

Moving to our industrial segment sales grew by 25% due to year over year price increases, partially offset by lower volume solely due to the fewer days in the period.

Speaker 3: Industrial operating profits surged by 32.6 percent, driven by favorable price costs partially offset by lower volume.

Industrial operating profit surged by 32, 6% driven by favorable price cost, partially offset by lower volumes.

Speaker 3: our industrial segment's margin profile increased to 8.7% compared to last year's 7.9%.

Our industrial segment margin profile increase to eight 7% compared to last year's seven 9%.

Speaker 3: Are all other sales declined by 25.7%, driven mostly by the sale of our display and packaging businesses, but partially upset by the stronger volume mix and higher prices?

Our all other sales declined by 25, 7% driven mostly by the sale of our display and packaging businesses, but partially offset by the stronger volume mix and higher pricing.

Speaker 3: All other operating profit decreased by 34.5% due to the display and packaging divestiture and price cost had

All other operating profit decreased by 34, 5% due to the display and packaging divestiture and price cost headwinds.

Speaker 3: Margins declined to 5.8% from the prior year's 6.5%.

Margins declined to five 8% from the prior year's six 5%.

Speaker 3: So for the total company, sales were higher by 4.6%. And operating profit was relatively flat, resulting in a company-wide operating margin of 8.7% compared to last year's 9%.

So for the total company sales were higher by four 6% and operating profit was relatively flat, resulting in a companywide operating margin of eight 7% compared to last year's nine 2%.

Speaker 3: Listening to cash flow, about halfway down the next slide, you see that our full year operating cash flow was $299 million compared with $706 million in 2012.

Shifting to cash flow about halfway down the next slide you can see that our full year operating cash flow was $299 million.

Compared with $706 million in 2020.

Speaker 3: While we did have various large non-cash items related to our pension termination process, I am going to focus my comments on the most important drivers to actual cash

While we did have various large noncash items related to our pension termination process I am going to focus my comments on the most important drivers to actual cash flow.

Speaker 3: So first, during 2021, we contributed $125 million to our U.S. Inactive Pension Plan related to the termination process of that plan.

First during 2021, we contributed $125 million to our U S and active pension plan related to the termination process of that plan.

Speaker 3: Another important driver was the year of her year, $158 million negative swing and cash flow from networking capital.

Another important driver was the year over year $158 million negative swing in cash flow from networking capital.

Speaker 3: During 2021, our working capital balances steadily increased, driven by increased business activity, inflation, as well as unique supply chain dynamics.

During 2021, our working capital balances steadily increased driven by increased business activity and inflation as well as unique supply chain dynamics.

Speaker 3: I'll note that our increased working capital balances during the fourth quarter of 21 is contrary to our historical trend.

I will note that our increased working capital balances during the fourth quarter of 'twenty. One is contrary to our historical trends. However, the current operating environment uniquely impacted our working capital balances, which is reflected in the higher year end position.

Speaker 3: However, the current operating environment uniquely impacted our working capital balances, which is reflected in the higher year end.

Speaker 3: Moving down to our full year CapEx spend, our net spend was $243 million in 2021 compared to $181 million in the prior year.

Moving down to our full year Capex spend our net spend was $243 million in 2021 compared to $181 million in the prior year.

Speaker 3: That $62 million increase is mostly due to spending on Project Horizon.

The $62 million increase is mostly due to spending on project horizon.

Speaker 3: This takes us to 2021 free cash flow of $56 million compared to $525 million in 2020.

This takes us to 2021 free cash flow of $56 million compared to $525 million in 2020.

Speaker 3: I'll also highlight that in 2021, we paid cash dividends of $179 million.

I'll also highlight that in 2021, we paid cash dividends of $179 million.

Speaker 3: On slide nine, you see that our balance sheet and our liquidity position remain strong, which did serve us well as we completed the Ball Metal Pack acquisition in January .

On slide nine you see that our balance sheet and our liquidity position remained strong which did serve us well as we completed the <unk> acquisition in January .

Speaker 3: As a reminder, both Moody and S&P affirmed our credit rating in conjunction with this acquisition.

As a reminder, both Moody's and S&P affirmed our credit ratings in conjunction with this acquisition.

Speaker 3: So that concludes my review of our fourth quarter results, so I'll move into my review of our first quarter and full year guidance for 2022.

So that concludes my review of our fourth quarter results. So I'll move into my review of our first quarter and full year guidance for 2022.

Speaker 3: Beginning at the top of slide 10, you'll first see our reported first quarter and full year 2021 base earnings per share of $0.90 and $3.55 respectively.

Beginning at the top of Slide 10, Youll Youll first see our reported first quarter and full year 2021 base earnings per share of <unk> 90, and.

And $3 55, respectively.

Speaker 3: So, following a review of our consumer peers and discussions with outside advisors, we've decided to treat amortization of acquired intangibles as a non-base expense going forward.

So following a review of our consumer peers and discussions with outside advisers, we've decided to treat amortization of acquired intangibles as a non base expense going forward.

Speaker 3: So going forward and including the metal pack acquisition, approximately 50% of our sales are in our consumer sector.

So going forward and including the metal pack acquisition, approximately 50% of our sales are in our consumer segment. So we feel this change to our base earnings represents a more clear view of our operational performance and improved comparability to our consumer peers.

Speaker 3: So we feel this change to our base earnings represents a more clear view of our operational performance and improved comparability to our consumer peers.

When removing this amortization expense from base earnings our 2021 restated earnings per share or $1, <unk> and $3 93 for.

Speaker 3: When removing this amortization expense from base earnings, our 2021 restated earnings per share are $1.00 and $3.93 for the first quarter and the full year of 2021 respectively.

For the first quarter and the full year of 2021, respectively.

Speaker 3: Our outlook for first quarter 2022 base earnings using the new definition and including our recently acquired Ball Metal Pack business is a range of $1.25 to $1.35 per share.

Our outlook for first quarter 2022 base earnings using the new definition and including our recently acquired ball metal pack business is a range of $1 25.

To $1 35 per share.

Speaker 3: while our full year 2022 base earnings are expected to be between $4.60 and $4.80 per share.

While our full year 2022 base earnings are expected to be between $4 60.

And $4 80 per share.

Speaker 3: At the midpoint of these ranges, we have added back $0.17 in the first quarter related to amortization expense and $0.65 is added back for the full year.

At the midpoint of these ranges we have added back 17 in the first quarter related to amortization expense and 65 is added back for the full year.

Speaker 3: This full year guidance represents a 20% increase over our 2021 restated base earnings per share. And this increase is driven by both strong performance by our legacy businesses, and by the addition of ball metal.

This full year guidance represents a 20% increase over our 2021 restated based earnings per share and this increase is driven by both strong performance by our legacy businesses.

And by the addition of ball metal pack.

Speaker 3: Our 2022 guidance is based on the same key assumptions for our legacy business that we reviewed in early December at our Analysts' Day. And in a few minutes, Howard will provide additional comments about key drivers to our 2022 outlook, including our strong start to this year.

Our 2022 guidance is based on the same key assumptions for our legacy business that we reviewed in early December at our analyst day.

And in a few minutes Howard will provide additional comments about key drivers to our 2022 outlook, including our strong start to this year.

Speaker 3: Specific to our acquisition of Ball Metal Pack, I'll note that our 2022 sales are now expected to be between $7 billion and $7.3 billion, including the sales from the acquisition.

Specific to our acquisition of all metal pack I'll note that our 2022 sales are now expected to be between 7 billion and $7 3 billion, including the sales from the acquisition.

Speaker 3: Also, we've increased our forecast for interest expense by $34 million to a new full year estimate of $88 million.

Also we've increased our forecast for interest expense by $34 million to a new full year estimate of $88 million.

Speaker 3: In addition, we're providing an outlook for our full-year EBITDA, which is between $910 and $960 million.

In addition, we're providing an outlook for our full year, EBITDA, which is between 910 and $960 million.

Speaker 3: Moving to slide 11 in our 2022 cash flow guidance, we are targeting to generate $715 million of operating cash flow and $390 million of free cash flow, both significantly above our 2021 results.

Moving to slide 11, and our 2022 cash flow guidance, we are targeting to generate $715 million of operating cash flow and $390 million of free cash flow.

<unk> significantly above our 2021 results.

Speaker 3: Similar to our base earnings, our key assumptions for our cash flow outlook are consistent with what we reviewed in December . However, we have now included the impact of what I'll call Sunoco Metal Packaging by including their EBITDA and CAPEX spending, as well as the incremental interest and income tax expenses, which are roughly offset by the cash tax benefit we expect to receive related to purchase accounting. So that concludes my.

Similar to our base earnings are key assumptions for our cash flow outlook are consistent with what we reviewed in December .

However, we have now included the impact of what I'll call Sunoco metal packaging by including their EBITDA and Capex spending.

As well as the incremental interest and income tax expenses, which are roughly offset by the cash tax benefit we expect to receive related to purchase accounting.

So that concludes my comments, so I'll turn it over to Howard.

Speaker 9: Great. Thanks, Julie, and good morning, everyone. Let me share my thoughts on our 2021 performance.

Great. Thanks, Julian and good morning, everyone. Let me share my thoughts on our 2020 more performance.

Speaker 9: provide you an update on our integration of the ball metal pack acquisition and talk briefly about what market trends we are starting to see in twenty twenty two.

Raj you an update on our integration of the <unk> acquisition and talk briefly about what market trends, we are starting to see in 2022.

Speaker 9: You know, the look back at all we accomplished last year, I couldn't be more proud of our team, how they've worked together to produce results which achieved the high end of our guidance despite unprecedented headwinds from storm supply.

We will look back at all we accomplished last year I couldn't be more proud of our team worked together to produce results, which achieved the high end of our guidance despite unprecedented headwinds from storms supply chain disruptions inflation and the continuing effects of COVID-19 .

Speaker 9: inflation and the continuing effects of COVID.

Speaker 9: Demand recovered for many of our pandemic impacted businesses with volume next growing 3 percent for the.

Demand recovered for many of our pandemic impacted businesses with volume mix growing 3% for the year, we aggressively drove price increases to counter higher raw material and non material inflation.

Speaker 9: We aggressively drove price increases to counter higher raw material and non-material inflation.

Speaker 9: Julie said for the first time since mid 2019, we achieved a positive price.

And as Julie said for the first time since mid 2019, we achieved a positive price cost relationship in the fourth quarter.

Speaker 9: We increased capital spending to fund more high-return projects, including our $125 million investment in Project Horizon.

We increased capital spending to fund more high return projects, including our $125 million investment in project Horizon.

Speaker 9: better focus our sustainability efforts, including setting aggressive, science-based targets to meaningfully reduce greenhouse gas emissions.

We better focused our sustainability efforts, including setting aggressive.

<unk> started to meaningfully reduce greenhouse gas emissions over the next decade.

Speaker 9: We simplified our portfolio by exiting the display and packaging business, and recently added Ball Metal Pack, which further expands our sustainable consumer packaging.

We simplified our portfolio.

The display and packaging business and recently added ball metal part, which further expands our sustainable consumer packaging offering and its Julie noted will be immediately accretive to base earnings and cash flows.

Speaker 9: and it's surely noted will be immediately accretive to base earnings and cash.

Speaker 9: Finally, we returned a record for $100 million in cash to shareholders, through dividends and share reports.

Finally, we returned a record $400 million of cash to shareholders through dividends and share repurchases.

Speaker 9: Now, back in December at our analyst meeting, we outlined our value creation strategy, which is focused on being the benchmark company for yield and stability in our enterprise.

Back in December at our analyst meeting, we outlined our value creation strategy, which is focused on being the benchmark company for yield and stability in our industry.

Speaker 9: To meet our financial targets of $1 billion in annual EBITDA by 2026 without acquisition, we're focusing increased investment in our core consumer and industrial business.

To meet our financial targets of $1 billion of annual EBITDA by 2026 without acquisition, we're focusing increased investment in our core consumer and industrial businesses and consolidating around a uniform operating model to expand our competitive advantage.

Speaker 9: and consolidating around a uniform operating model to expand our competitive.

Speaker 9: while simplifying our structure to improve efficiency and effectiveness.

While simplifying our structure to improve efficiency and effectiveness.

Speaker 9: As part of our invest-in-ourselves actions, we expect to spend around $325 million in 2022 to further accelerate growth and drive productivity.

As part of our invest in ourselves actions, we expect to spend around $325 million in 2022 to further accelerate growth and drive productivity savings.

Speaker 9: Just this week, our Board of Directors approved approximately $20 million in capital to expand two of our flexible packaging.

Just this week our board of directors approved approximately $20 million in capital to expand two of our flexible packaging facilities.

Speaker 9: As a reminder, our flexible business achieved record top-line and bottom-line performance in 2020.

As a reminder, our flexible business achieved record topline and Bottomline performance in 2021.

Speaker 9: To further growth, this business is focused on developments around key capabilities, including complex laminations, coalfield, pouching, lidding.

To further grow this business is focused on developments around key capabilities, including complex laminations coal through polishing loading.

Speaker 9: specialty finishes, such as precision scoring and specialty code.

And specialty fashion, such as precision, scoring and specialty codes.

Speaker 9: At our Edinburgh Indiana facility, we'll be installing a new load of revier press along with the three fly adhesive laminator. This new revier press laminator, they are extremely efficient and able to run at speeds that are nearly 65% faster.

At our Edinburg, Indiana facility will be installing a new roto gravure for us along with the three fly adhesive laminating. This.

This move will reveal for us in laminate are.

They are extremely efficient enable to run speeds that are nearly 65% faster and so on existing equivalent.

Speaker 9: and it will allow us to take on new business as we have become.

And it will allow us to take on new business as we have become capacity constrained.

Speaker 9: In addition, this new equipment has many sustainable attributes. This includes reducing at least 515 tons per year of greenhouse gas emissions while increasing our use of recycled, ready monofilm linemen for our environment's flex line of more sustainable.

In addition, this new equipment has many sustainable attributes this includes reducing at least.

515 tons per year of greenhouse gas emissions, while increasing our use of recycled ready mono film laminates for our environments.

With flex line of more sustainable flawless and Elk Grove, Illinois.

Speaker 9: In Elk Grove, Illinois, we will be installing a new state of the York Flexographic Press, which will replace two 20-year-old machines.

We will be installing a new state of the art, Portsmouth graphic plus which will replace 220 year old machines.

Speaker 9: This press will produce significant productivity savings, enable us to expand production of peelable and resealable living products across multiple foods.

This festival produce significant productivity savings enable us to expand production of favorable and receivable living products across multiple food margins.

Speaker 9: Now let me switch gears and talk briefly about our January 26th acquisition of Bald Metal.

Now, let me switch gears and talk briefly about our January 26 acquisition of all metal part we were extremely pleased to have been able to complete the acquisition early jump started the integration process.

Speaker 9: We were extremely pleased to have been able to complete the acquisition early and have jump-started the integration.

Speaker 9: So NOCA and the Ball Metal Pact are a clear strategic...

Sonoco and the ball metal.

A clear strategic fit with <unk>.

Speaker 9: The business complements our largest consumer packaging franchise, our iconic canned business, and Closure's division.

Business complements our largest consumer packaging franchise.

Our iconic and business closures division.

Speaker 9: And combined, Sunoco's can-making operations are expected to produce approximately $2.4 billion in global sales this coming year.

And our combined Sunoco scan, making operations are expected to produce approximately $2 4 billion in global sales this coming year.

Speaker 9: This combination allows us to progress towards our objectives of fewer, bigger, and better businesses and are focused on stable, defensive, high cash flows.

This combination allows us to progress towards our objective of fewer bigger and better businesses and our focus on stable defensive high cash flows.

Speaker 9: We're extremely excited to welcome 1,300 experienced associates.

We're extremely excited to welcome 1300 experienced associated with <unk>.

Speaker 9: associates into the Sunoco family, and I personally have had the opportunity to visit each of the eight facilities since the closing to help kick off the integration process.

And for the Sunoco family.

And Unfortunately, I've had the opportunity to visit each of the eight facilities since the closing to help kick off the integration process.

Speaker 9: There is a lot we have in common, including incredibly talented and experienced teams who are operating well-invested, state-of-the-art equipment utilizing the latest technologies. We've also had

There is a lot we haven't com, including an incredibly talented and experienced team will operating well invested state of the order equipment utilizing the latest technology.

Also have an opportunity to speak with many of our new customers. Many already know Sunoco and they are pleased to be working with an experienced global food packaging confidence.

Speaker 9: Many already know Sonoco and they are pleased to be working with an experienced global food.

Speaker 9: The Ball Metal Pack name has been changed to Sunoco and the business's financial results are expected to be reported in our consumer packaging segment.

But <unk> nine has been changed to Sunoco and the businesses financial results are expected to be reported in our consumer packaging segment.

Speaker 9: Jim Peterson, a 15-year leader in the industry, is remaining as president of the business and tenured manager.

Jim Peterson, a 15 year leader in the industry is remaining as president of the business.

And tenured management team also plans to remain weak.

Speaker 9: We've brought in a third-party expert to assist us in the integration process and to focus us on achieving the realistic synergy targets of $20 million of savings.

We brought in a third party expert to assist us in the integration process and are focused on achieving the realistic synergy targets of $20 million of savings over the next three years.

Speaker 9: The key focus of our integration is keeping a people-first mentality, maintaining...

The key focus of our integration is keeping people force mentality.

Maintaining stable operations and meeting our financial targets, we have laid out today, while sustaining a high level of customer satisfaction.

Speaker 9: meeting the financial targets we have laid out today, while sustaining a high level of customer service.

Speaker 9: Closing we're extremely optimistic entering 2022 that our core consumer and industrial businesses are well positioned to achieve a 20 percent year over year improvement in base earnings per.

In closing, we're extremely optimistic entering 2022 that our core consumer and industrial businesses are well positioned to achieve a 20% year over year improvement in base earnings per share.

Speaker 9: As far as business activity, we have seen a very strong start in January across our entire portfolio.

As far as business activity, we have seen a very strong start in January across our entire portfolio.

Speaker 9: Demand for our global industrial products have recovered, and several of our businesses and the all-other group, which have been impacted by supply chain interruptions, are seeing improvement.

Demand for our global global industrial for all of US have recovered and several of our businesses in the all other group, which have been impacted by supply chain interruptions are seeing improvements and we're continuing to take actions to improve productivity and profitability.

Speaker 9: We continue to take actions to improve productivity and profitability.

Speaker 9: Finally, our thermostat cold chain packaging business remains busy in the first quarter providing temperature assured shippers for transporting COVID.

Finally, our <unk> cold chain packaging business remains busy in the first quarter, providing temperature assured shippers to transporting COVID-19 vaccine.

Speaker 9: Our efforts to recover higher costs continue to gain traction. We implemented necessary price increases effective January 1st.

Our efforts to recover higher costs continued to gain traction we implemented necessary price increases increases effective January one.

Speaker 9: we recently announced additional price recovery efforts to go into effect in March. In both industrial

And we recently announced additional price recovery efforts to go into effect in March in both industrial and our consumer businesses. We will remain diligent to stay ahead of the <unk> curve and expect strong cost recovery.

Speaker 9: We will remain diligent to stay ahead of the price-cost curve and expect strong cost recovery as the year progresses.

Year progresses.

Speaker 9: So Narco's purpose is better packaging, better life. This means we're committed to creating sustainable packaging solutions that help build our customers.

So now it goes purpose better packaging better life. This means we're committed to creating sustainable packaging solutions that help build our customers' brands and help enhance their product offerings and improved the quality of life for people around the world We remain committed to return.

Speaker 9: in

Speaker 9: to prove the quality of life for people around the world.

Speaker 9: We remain committed to returning cash to our shareholders and believe our value creation strategy will make Sonug a better...

Cash to our shareholders and believe our value creation strategy will make sunoco better than ever.

Speaker 9: Now with that operator we would be pleased to review any questions and if you would

Now with that operator, we would be pleased to review any questions.

And if you would go through the Q&A procedures.

Speaker 1: Thank you. Ladies and gentlemen, as a reminder to ask the question, you will need to press star then one on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask the question. Please stand by while we compile the Q&A roster.

Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

Withdraw your question press the pound key.

Again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Speaker 1: Our first question comes from the line of Mark Weingart with Seaport Research. Your line is open.

Our first question comes from the line of Mark <unk> with Seaport Research. Your line is open.

Speaker 13: Thank you, thank you first for the very thorough details, et cetera. Two questions. One was, you mentioned at the end of December , there was some slowing at least in some of the businesses, and yet you're also talking about January now being very, very strong.

Thank you. Thank you first for the very thorough details et cetera.

Question. One was you mentioned at the end of December there was some slowing at least in some of the businesses and yet you're also talking about January now being very very strong.

Speaker 13: Could you get a little bit more color perhaps on what that shift has been and if there's any more specificity in terms of volumes or whatever else might be useful for us to gauge?

Could you give a little bit more color perhaps.

What that shift has been and if theres any more specificity in terms of volumes or whatever else might be useful for us to gauge how strong January is coming out that would be terrific and then just the second question, maybe maybe somewhat Relatedly is Scott you also in your 2022 guidance laid out some very impressive step up in EBIT.

Speaker 13: how strong a January is coming out that would be terrific. And then just the second question maybe, maybe somewhat related.

Speaker 13: is also in your 2022 guidance laid out some very impressive step up in EBITDA expectations.

Our expectations pretty big range, the nine tenths of the 960 <unk> what would be the key determinant do you think on where you are likely to come out on that range is it mostly on the volume side is it on.

Speaker 13: pretty big range, the $910,000 to the $960,000. What would be the key determinant, do you think, on where you're likely to come out on that range? Is it mostly on the volume side? Is it on the amount of pricing you get relative to the cost? What do you think is the key driver in where you're likely to come out in that range ultimately?

The amount of pricing you've got relative to cost. So what would you think that the key driver.

You are likely to come out in that range ultimately.

Thanks Mark.

<unk>.

Speaker 9: Appreciate you joining us. Let me say at the end of December December was a bit of a surprise. You know we came into our analysts day expecting a relatively strong second half of December and we saw just the opposite. We saw a pullback most of which I will say it was related to COVID-19 and or supply chain issues that our customers were feeling.

I appreciate you joining us.

Let me say at the end of December December was a bit of a surprise we came into our analyst day expecting a relatively strong second half of December and we saw just the opposite resolved pullback most of which I will say is related to COVID-19 .

And or supply chain issues that our customers will tell you and so we have some specific situations.

Speaker 9: We had some specific situations that that surprised us where customers could not source the necessary.

That surprised us where customers could not.

For the necessary raw materials they needed.

Speaker 9: So yes, we saw December slow down and felt like it was an anomaly related to the supply chain type issues that we all are fully aware of.

So yes, we saw December slowdown and felt like it was an anomaly related to the supply chain type issues.

We all are fully aware of as we entered January .

Speaker 9: As we enter January , you know, that was my comments were really in December around specific unique customers. But as we enter January , we're strong in every portion of our business and almost on a global basis. So we're seeing good volume. But of course, as we've talked over and over again, price is, is really starting to roll in.

That was my comments were really in the.

December around specific unique customers.

January were strong in every.

A portion of our business and almost on a global basis.

We're seeing good volume.

But of course, as we've talked over and over again.

<unk> is really starting to roll in.

Speaker 9: starting, as Julie noted, and my commentary noted, that

We're sorting as Julian noted enough in my commentary noted that.

Speaker 9: first time price fell positive positive was in was in December and we're seeing that role in a more significant and meaningful way as we enter this one into this year. So we haven't closed January . It'll be another day or two. But what we're looking at right now is strong volume supported but really nice pickup.

The first on price cost.

Positive lives within December and you're seeing that role more significant and meaningful way as we enter this one this year. So we haven't closed January there'll be another day or two but.

What we're looking at right now is strong volumes supported with really nice pickup in terms of price.

Speaker 9: You know, in terms of the EBITDA for next year, I'd say, you know, I could bucket it to really two main categories, yes, price cost.

In terms of the EBITDA for next year I would say that could bucket is really two main categories, yes price call and finally getting caught up to where we need to be.

Speaker 9: finally getting caught up to where we need to be and productivity is going to be strong in general.

And productivity is going to be strong in general for next year.

Speaker 9: So those are the two drivers and of course the incremental improvement coming from Baldwin.

Those are the two drivers.

And of course, the incremental improvement coming from ball metal time.

Speaker 13: Great. And maybe if it's fair, one last follow-up. On the kind of volume expectations, organic, so not with ball metal packs, what do you think is a reasonable starting point for expectations?

Great and maybe if it's fair one last follow up on the on the kind of volume expectations organic.

Not with Paul <unk>, what do you think is a reasonable starting point for expectations.

Speaker 9: include. Well right now for the legacy we're looking at a very modest 1 percent across the board.

Well right now for the legacy we're looking at.

Very modest 1% across the board.

Speaker 9: And that's that's going to vary among the three segments that we have today the fall, you know We're expecting that the food can business is going to see a slight kick downward But what's interesting about this acquisition is 35% of the turnover? Represents aerosol where we are seeing an actual pretty nice recovery As we go into the year

And that's going to vary among the three segments that we have today with ball.

We're expecting episodes can business is going to see a slight tick downward.

But what's interesting about this acquisition is 35%.

The turnover.

Represents aerosol, where we are seeing actual pretty nice recovery.

As we go into the year.

Speaker 9: this year. It's somewhat surprising, the COVID impact, as we looked at our participation in similar markets being in our adhesives and sealants, the center of the aisles and the big box.

This year is somewhat surprising the COVID-19 impact as we looked at.

Our participation in similar markets.

<unk> and sealants the center of the aisle.

<unk>.

And the big box.

Retail outlets.

Speaker 9: the aquasition participates heavily there as well. And last year, there was so much supply chain disruption in discrete chemicals, et cetera, that we're seeing good recovery on the aquasition side and we're seeing good recovery on the parallel basis.

The acquisition participant participates heavily there as well and last year.

There was so much supply chain disruptions and discrete chemicals et cetera that that we're seeing good recovery on the acquisition side and we're seeing good recovery on apparel all basis in our adhesives and sealants.

Speaker 9: Maybe more than what you asked for, but about 1%, and we're saying that the ball in total between aerosol and food are going to be up, but up slightly. Much appreciated.

No.

Maybe more than what your asphalt, but about 1% and were saying that ball in total between aerosol and food are going to be up slightly.

Much appreciate it I'll turn it over thank you.

Thank you.

Speaker 1: Our next question comes from the line of George Stathis with Bank of America. Your line is open.

Our next question comes from the line of George Staphos with Bank of America. Your line is open.

Speaker 2: Hi everyone, good morning. Thanks for all the details. Congratulations on closing the acquisition. I want to just maybe if we could take a different tack on sort of the earnings guidance for the year. Correct me if I'm wrong, I want to say that

Hi, everyone. Good morning, Thanks for all the detail.

Congratulations on closing the acquisition.

I wanted to just maybe if we could take a different tack on sort of the earnings guidance for the year.

Correct me, if I'm wrong I want to see that.

Speaker 2: Going into this year, the guide was for around $3.90. That was on the prior.

Going into this year as a guide was for around $3 90 that was on the prior year.

Speaker 2: uh... base and then we're at uh... you know basically four sixty four eighty can you help us parse between the amortization ad back the improving volumes and productivity in the legacy and the ongoing you know ball metal pack we're now sunoco metal packaging how you bridge from what was the prior guide uh... to the current uh... and then i had uh... one quick follow-on and then one sort of bigger picture question

Base and then we're at.

Basically $4 60 to 480 can you help us parse between the amortization add back.

The improving volumes and productivity in the legacy and the ongoing ball metal pack, we're now Sunoco metal packaging, how how you bridge from what was the prior guide.

The current.

Then I had one quick follow on and then one sort of bigger picture question.

Speaker 3: Great. I'm going to ask Julia to handle the question. Absolutely. Hi, George. Yeah, so you're right. Really, the starting point is for the legacy business and what we talked about in December , which is the $3.90 for this year. The add back of the amortization for the legacy business is $0.35, right? So that's about $46 million of amortization expense pre-tax.

Right.

Julia.

Absolutely, Yes, hi, George.

Yes, so youre right the really the starting point is for the legacy business and what we talked about in December which is the $3 94.

For this year.

The add back of the amortization for the legacy business is 35.

$6 million of.

Amortization expense pre tax.

Speaker 3: Then, we layered in our estimate for metal pack, call it a midpoint-ish of 45 cents. So again, that is excluding any amortization related to the purchase accounting, which obviously is very much still in process. So anything embedded in that related to purchase accounting, you know, is a best estimate at

And then we've layered in our estimate for metal pack call. It a midpoint ish.

45, so again that is.

Excluding any amortization related to the purchase accounting, which obviously is very much still in process. So anything embedded in that related to purchase accounting.

First estimate at this point.

Speaker 3: I guess what's important to note there is that 45 cents does include the incremental interest expense that we've estimated for the funding of the acquisition.

I guess, what's important to note there is that 45%.

It does include the incremental interest expense that we estimated for the funding of the acquisition. So on a gross basis as in pre tax net interest expense is kind of in that $35 million range or about 25 per share.

Speaker 3: So on a gross basis, as in pre-tax, that interest expense is kind of in that $35 million range, or about $0.25 per share. And so, anyway, when you piece all that together, again, the $3.90 plus the $0.35, that gets you to an adjusted legacy Sinoco of $4.25.

So anyway. So when you piece all that together again, the 390, plus a three plus a 35% that gets you to an adjusted legacy Sunoco of $4 25, and then again our estimate right now call. It midpoint of a range is 45.

Speaker 3: And then again, our estimate right now, the call at midpoint of a range is 45 cents.

Speaker 3: Again, net of interest and including our estimated purchase accounting now for metal pack and again all up to four.

<unk> net of interest and including our estimated purchase accounting now.

For metal pack and again, all up to $4 70.

Speaker 2: Thanks, Julie. I guess within that so you wind up more or less in the middle of the range

Thanks Julie.

Within that so.

Wind up more or less in the middle of the range.

Speaker 2: And yet you've had a really good start to the year, which would suggest that at this juncture, and I don't want to put words in your mouth, you're probably trending to the upper end of your range. I recognize it's only February , it's not December . But what are you, if you will, putting some, if you agree with the premise, putting some cushion in your models for you?

Yes.

And yet <unk> had a really good start to the year, which would suggest that at this juncture and I don't want to put words in your mouth.

We're probably trending to the upper end of your range I recognize it's only February it's not December .

What are you.

If you will putting some if you agree with the premise putting some cushion in your model for.

Speaker 2: relative to only being in the middle of the range when it looks like you're starting out, kind of with an upward bias, if you will. And then my bigger picture question...

Relative to only being in the middle of the range when it looks like Youre, starting out kind of with a kind of an upward bias. If you will and then my bigger picture question.

Speaker 2: you know, recognizing, you know, that SMP is an add on to your can business.

Recognizing.

Yes.

Isn't that onto your can business.

Speaker 2: You know, the former owner, a number of years ago, when they bought U.S. Can, you know, which got them into the number one position with aerosols, had a bit of a learning curve on the aerosol business and with that customer base. Are there any contract renewals? Are there any change in control provisions that you have to be mindful of? And just tell us in general, you know, is there anything different about the go-to-market and the contractual piece of that business?

The former owner a number of years ago, when they bought U S can.

Which got them into the number one position with aerosols.

<unk> had a bit of a learning curve on the aerosol business in with that customer base are there any contract renewals around there or any change in control provisions that you have to be mindful of and just tell us in general.

Is there anything different about the go to market and the contractual piece of that business.

Speaker 2: you know that you know maybe you want to provide some cushion for that we should be you know monitoring over time thank you guys and good luck in the quarter

Maybe you want to provide some cushion for that we should be.

Monitoring over time, Thank you guys and good luck in the quarter.

Speaker 9: Thanks, George. I wish I could take a great month and multiply it by 12 and tell you what the year is going to look like. That's what we do, Howard. I know that's what you guys do. It feels good to start out the year. You know, if I look through the quarter...

George and I wish I could take great months, and multiplied by 12 and tell you what the year's going away.

That's what we do Howard.

I know that's what you got.

We.

Look it feels good to start out the year.

As I look through the quarter.

Speaker 9: We're very bullish. Let's put it that way. But we know what's going to happen be at macroeconomic in general on the front or the next variant. It's just really hard to say. So I'm just going to say, let's take a midpoint and.

We're very bullish let's put it that way.

Yeah.

Who knows what's going to happen in the macro economics in general.

The next area.

It's just really hard to say, so I'm just going to.

So it looks good.

Mid points.

Speaker 9: And frankly, the other part of it is, is we have only earned literally.

And.

Frankly, the other part of it is we have only.

Literally.

Speaker 9: All metal pack two weeks to the day, so we've got some warnings there as well in terms of some of the assumptions I will say that that our deal model did overlay very nicely with what they internally were forecasting for the

All metal pack too.

To this day.

We've got some lines there as well in terms of some of the appliances I will say that that our deal model did overlay very nicely with what we were forecasting for the year.

Speaker 9: But we've got we've got work to do there as well. So I'd like to tell you that that that we're way on the upside, but You know, I don't think that would be responsible at this point in time where we are in the year

But we've got we've got work to do there as well.

I'd like to tell you that.

We're way on the upside but no.

I don't think that would be responsible at this point in time, where we are on the year.

Speaker 9: On the aerosol side, first as it relates to the contract, good shape there, they've got a first off. Multi-decade relationships with all of the major health.

On the aerosol.

First as it relates to the contracts good shape there.

They've got for fall.

Multi decade.

Relationships with all of the major customers.

Speaker 9: There are no major contracts that we're looking at at least.

There are no major contracts.

We're looking at at least in 2022.

Speaker 9: And frankly, you talked about change of control, no issues there as well.

And frankly.

Talking about change of control of note no issues there as well.

Speaker 9: Probably more importantly is that we look at the customer base on the aerosol side and I need to keep going back to it. We don't talk about that much, but that's the caulking cartridges. I'll name a brand, maybe I shouldn't, but liquid nails.

Alright more.

Fortunately as we look at the customer base on the aerosol side and I keep going back to it.

Steven.

Don't talk about that much but.

It's the coffee shortages volatile name a brand, maybe I shouldn't but liquid nails.

Speaker 9: fine or adapt like poly. You know we all the largest player in that segment and as I link the customer base.

Yes.

Fine or adapt pharma.

We are the largest player in that.

<unk>.

But as I'd link the customer base.

Speaker 9: on the aerosol side, it's an impressive number of same.

The aerosol.

It's an impressive number of St.

Speaker 9: Effectively we're walking into an all-mountain named House of Hosts. We're walking in.

So effectively we're walking into in our Montney.

So we're walking into.

Speaker 9: These major CPGs that we know extremely well, that have had, in our case, a multi-decade relationship, with a great deal of appreciation and support when we walk in the door. And frankly, I can say that on the food chain.

This measure.

PPG.

We know extremely well with our case multi decade relationships with.

Great deal of appreciation and support and we welcome them.

And frankly, I can say that on the food can side when we walk in and these are customers that.

Speaker 9: We walk in these are customers that know if they don't know what's going on on process can't supply or closure service they know it's more flexible. They know it's more plastic.

No.

I don't know lymphoma, all non process.

Supplier closures business I know most of our flexible business I noticed from our plastics businesses.

Speaker 9: I can just simply say that every customer that I have spoken to, Roger Fuller has spoken to more than his fair share. They are extremely excited to see Sumoko enter this part of their supply chain. Thanks for the thought, Howard. Thank you, Howard. Thank you, Roger. Thank you, Julie. Thank you. Our next question comes.

Can they walk in.

I can just simply say that every customer that I've spoken to Rodger Fuller has spoken to.

More than his fair share there.

Extremely excited to see Sanofi.

Sure.

This part of their supply chain.

Thanks for the thoughts Howard. Thank you Howard. Thank you Roger Thank you Julien.

Thank you.

Our next question comes from the line of Adam Josephson with Keybanc. Your line is open.

Thanks, and good morning, everyone hope you're well.

Speaker 6: Howard or Julie can you just update us on the ball metal pack sales and profitability when you announced the deal. I think estimated sales last year were 850. You said this morning they were 837. Was the EBITDA in line with what you expected.

Howard or Julie can you just update us on the ball metal pack sales and profitability. When you announced the deal I think estimated sales last year were 850.

<unk>.

So this morning. They were 837 was the EBITDA in line with what you expected.

Speaker 6: in your acquisition presentation above, below, and then how much growth in EBITDA are you expecting in that business this year in terms of EBITDA, just as part of the

Senior acquisition presentation above below and then how much growth in EBITDA are you expecting in that business. This year in terms of EBITDA just as part of the.

Speaker 6: 45 cents of acquisition accretion that you're expecting after adding back amortization.

45.

<unk> acquisition accretion that you're expecting after adding back amortization.

Speaker 9: Adam, I'll put some first part in there and Julie can get into the numerical side of your question, but...

Yes.

I'll pass on the first part.

We can get into the numerical side of your question, but.

Speaker 9: Yes, we announced they saw for their 2021 forecast, but we had clear the ability of.

Yes.

We announced based off of off of their 2021 forecast, but.

But we have clear visibility of.

What what's to come.

Speaker 9: And so that's really what we baked into our overall models and ultimate price. And a lot of that was around what I probably get across during our announcement December 20th or so.

And so thats really what we baked into our.

Overall models ultimate price.

A lot of that was around what I tried to get across drawing our announcements.

20th of some debt.

And just one keep in mind that they have spent somewhere in the neighborhood of $200 million over the last three or four years of recapitalizing.

Speaker 9: keep reminding that they have spent somewhere in the neighborhood of two hundred million dollars over the last three four years recapitalized.

Speaker 9: across the board, consolidating, recapitalizing, doing the right thing. Very impressed with how

Across the board consolidating recapitalizing and doing the right things very impressed with.

Oh Wow.

Speaker 9: business had been managed over prior years with that came pent up productivity opportunities. I know that again when we announced when you're starting up new assets in the fourth quarter of the year they're not going to generate meaningful benefit in that in that.

The business had been managed over prior years with that came a pent up productivity opportunities.

I know that again, when we announce when you're starting up new assets in the fourth quarter of the year. They are not going to generate meaningful benefit in that year. So we saw that coming we built that into the model.

Speaker 9: So we saw all that coming, we built that into the model, talking about productivity, but there's also a new customer acquisition as well, that was capitalized, equipment starting up, that there weren't seem to benefit last year, that we clearly were able to identify and see that.

I'm talking about productivity, but theres also new customer acquisition as well.

It was capitalized equipment, starting up that they werent seeing the benefit last year that.

We clearly were able to identify and see that benefit coming after three years.

Speaker 9: It was a combination of things that, yes, when we announced the multiple looks high, you know, on the base after tax benefits, it was more reasonable, then we compared it with what we saw that go forward looked like and it became an extremely reasonable price point for us to read.

It was a combination of things that.

Yes, when we announced the multiple looked high.

On a base after tax benefits. It was more reasonable then we compare that with what we saw the go forward look like and it became.

Extremely reasonable.

Price point for us to reach so.

That ill ask Julia if you can give us some more former nonrecurring.

Speaker 3: Thanks, Howard. Hi, Adam. Yeah, you know, I mentioned in my comments our updated outlook for this year's sales are in that $7 billion.

Yes sure Thanks, Adam.

Yes, I mentioned in my comments, our updated outlook for this year sales are in that $7 billion to $7 $3 billion range and so if again, if you think back to analyst day in December legacy Sunoco, we were around that $5 8 billion and so if you take that and I think now we'd say, that's probably hopefully a little on that.

Speaker 3: 7.3 billion dollar range and so if again if you think back to analyst day in December Legacy Sunoco we were around that 5.8 billion and so if you take that and you know I think now we'd say that's probably hopefully a little on the low side but nonetheless you know call it 5.8 to 6 billion Legacy Sunoco so then that you can imagine you know means that we're expecting for the new metal packaging business kind of in that

On the low side, but nonetheless, you know call it five.

8% to 6 billion legacy Sunoco.

And that you can imagine.

Is that we're expecting for that new metal packaging business kind of in that $1 $2 billion two.

Speaker 3: $1.2 billion to maybe slightly higher than that. And I guess just to remind everyone, of course, all these numbers we're talking about today for the acquisition are for 11 months.

Maybe slightly higher than that and I guess just to remind everyone of course all of these numbers, we're talking about today for the acquisition of for 11 months and so again.

Speaker 3: And so, again, these are not full year numbers, but they're close to full year numbers.

These are not full year numbers, but they are close to full year numbers.

Speaker 3: And then, you know, just kind of moving into EBITDA, and I don't know that we've said this really yet, but, again, you know, really, because of various things that Howard just mentioned, kind of in that, from the acquisition, adding in, in that kind of $130 million range of EBITDA. And, again, that's on top of kind of, you know, 8 to 810 that we're expecting from the legacy business.

And then just kind of moving into EBITDA and I don't know that we've said this really yet but again.

Really.

Because of various things that tower, just mentioned kind of in that from a from the acquisition, adding in that kind of $130 million range of EBITDA and again, that's on top of kind of 8% to 810 that we're expecting from the legacy business.

Speaker 6: Thanks, Julie. And just related to that, that $130, does that embed any kind of one-time price cost benefit? Obviously, template prices are going to be up.

Thanks Julien.

Related to that that 130 does that embed any kind of onetime price cost benefit obviously tin plate prices are going to be up.

Speaker 6: huge amount this year. Can you just help us with the whole price cost issue? How much of the expected growth from 21 to 22 in terms of the EBITDA is price cost and is that sustainable? Just can you help us understand that issue just given what some of the other companies in the sector are reporting along those lines?

Huge amount. This year can you just help us with the whole price cost issue how much of the expected growth from 'twenty one to 'twenty two in terms of the EBITDA is price cost and is that sustainable just can you help us understand that issue just given what some of the other companies in the sector are reporting along those lines.

Speaker 9: You know, first of all, super-hyperinflation across the deal, across the London, and, frankly, others that we've fallen through the year, but also there was a huge supply chain issue as well in terms of inventory and inventory availability. There's certainly some of that in here, but as I look across the company, we have that compared to the company

Yes, Adam.

First off.

Super Hyperinflation.

Across deal cost alignment on frankly.

All of those that we saw through the year.

But also there was a huge supply chain issue as well in terms of inventory and inventory availability.

Some of that in here.

But as I look across the company.

Have that.

Speaker 9: And our can business, our legacy business, as well as others.

In our can business, our legacy business as well as others.

Speaker 9: As I said earlier, we've owned the business for two weeks. Definition of how this is all going to materialize.

As I said earlier, we've owned the business for two weeks definition of how this is all going to materialize.

Speaker 9: We'll be learning as we go, there'll be some benefits for sure, but again, I want to take you back to my earlier comments about the pending pent-up opportunities that are ahead of us from a go-forward basis, and I'm talking about into late 2022, 2023, that are going to continue to produce the type of numbers that we've modeled.

We'll be we'll be learning as we go and there'll be some benefit for sure.

But again I want to take you back to my earlier comments about the pending.

Opportunities that.

That are ahead of us from a go forward basis, and I'm talking about into late 2022, 2023 that we're going to continue to produce.

The type of numbers that we've modeled through the acquisition process.

Alright, I appreciate that and just Julie one last one can you just back to George's question about the bridge from your last guidance did your base business assumptions change at all from the $3 90 to $4 70 at the midpoint and if so can you help quantify that at all.

Speaker 6: Appreciate that. And just, Julie, one last one. Can you just back to George's question about the bridge from your last guidance? Did your base business assumptions change at all from the 390 to the 470 at that point? And if so, can you help quantify that at all?

Speaker 3: Yeah, you know, really not dramatically. I mean, we did have maybe minor moving pieces around our buckets, but you know, we've already talked about, you know, our sales volume growth is still around that 1%. You know, we remain very bullish about price cost, but you know, we've baked that into the guidance. And so, you know, really, materially know, we're pretty much aligned still with what we talked about in December . Yeah.

Yes, really not dramatically I mean, we did have maybe minor moving pieces around our buckets, but as we've already talked about our sales volume growth is still around that 1%.

We remain very bullish about price cost but.

We've baked that into the guidance and so really materially no.

Pretty much aligns still with what we talked about in December .

Thanks, so much Julie.

Thanks Al Thank you.

Speaker 1: Our next question comes from the line of Gantt Ham, Penn Jabby with Beard. Your line is open.

Our next question comes from the line of gas Ham Punjabi with Baird. Your line is open.

Speaker 5: Yeah, thank you. Julie, maybe just as a follow-up to Adam's question on the guidance construct. So, in your December meeting, I think you pointed towards $0.25 contribution from favorable price cost.

Yes. Thank you.

Julian maybe just as a follow up to Adam's question on the.

The guidance construct so in your December meeting I think you pointed towards 25 contribution from favorable price cost.

Speaker 5: You know, I know it's early in the year, but, you know, oil has moved up and many others are calling out inflation pressures, whether it's labor and so on. And I'm just curious, on the price cost, has that assumption changed materially, just given what you're seeing at this point with, you know, energy inflation? And then productivity of 31 cents, you know, post-Omicron, has that changed at all?

I know it's early in the year, but oil has moved up.

Many others are calling calling out inflation.

<unk>, whether it's labor and so on and I'm just curious on the price cost has that assumption changed materially just given.

What youre seeing at this point with energy inflation, and then productivity of 31 cents posted omicron has that changed at all.

And any significance.

Speaker 3: Yeah, again, I just really say non-material. We're still, I think, you know, we're obviously watching inflation very closely and obviously it's gonna continue this year, but so do our pricing increases.

Yes, again, I would just really say not materially we're still.

We're obviously watching inflation very closely and obviously, it's going to continue this year, but so do our pricing increases again across the business, both contractually and open market. So we've already had really quite a few.

Speaker 3: again across the business both contractually and open market. So we've already had really quite a few price increases as we started this year. And a lot of that was expected. So.

Price increases as we started this year and a lot of that was expected so.

Speaker 3: Yeah, so again, I'm gonna say, as we sit here today, know the same, you know, your 25 cents or 31 cents are still good estimates for those earnings drivers.

Yes, again, I'm going to say as we sit here today no the same 25 or 31.

Are still a good estimates for for those.

Earnings drivers.

Speaker 5: Thank you. And maybe a question for Howard. You know, in context of consumer inflation, which is pretty significant, you know, highest in 40 some odd years, you have a large consumer portfolio. Yes, it's, you know, very much aligned towards consumer staples. But as you think about the sub verticals within your consumer business, including ball, how do you see this sort of playing out in terms of any impact from elasticity as your customers are also pushing through these very, very significant increases on the price?

Thank you and maybe a question for Howard in context of consumer inflation, which is pretty significant highest in 40, some odd years.

You have a large consumer portfolio, yes, it's very much aligned towards consumer staples, but as you think about the sub verticals within your consumer business, including ball.

How do you see this playing out in terms of any impact from elasticity.

As your customers are also pushing through these very very significant increases on the pricing side.

Speaker 9: You know really not so hard to say what what I will say is that you know when when while it's.

So it's hard to say.

What I will say is that when when wallets.

Speaker 9: Spending capacity of individuals decreased we'd normally benefit from that in terms

The spending capacity of individuals' decreased we'd normally benefit from that in terms of lesser than that.

Speaker 9: Less eating at home, more consumption, I mean, excuse me, away from home, more consumption at home.

More consumption I mean, excuse me away from more consumption.

Speaker 9: But I really don't know how that's all going to play out.

But I really don't know, how that's all going to play out.

Speaker 9: But again, if worst-case scenarios happen and we fall into a much slower type economic environment,

But again, if worst case scenarios happen then we fall into a much slower times economic environment.

Speaker 9: that's a positive for the

Typically find that.

That's a positive for the.

Products in our portfolio.

Speaker 9: You know, people are going to walk away because, look, everything's relative, right? Everything is in place.

And I don't think we're going to walk away because everything's.

Everything's relative right everything is inflating.

Speaker 9: So we don't see it from a share position as much as, oh, we're going to see more consumption from value drivers for people buying.

So we don't see it from a from a share position as much as we're going to see more consumption.

From value drivers for people buying.

In retail versus economics.

Okay. Thanks, so much.

Speaker 1: Our next question comes from the line of Josh Spector with UBS. Your line is open.

Thank you. Our next question comes from the line of Josh Spector with UBS. Your line is open.

Hi, Thanks.

Speaker 7: So just one of the free cash flow, just curious what would be your expected uses for the next few years. I mean your guidance alone has you kind of getting down to the high to from a leverage perspective. Do you feel the need to pay down gross debt from here or do you use cash elsewhere?

Hey, Thanks for taking my question.

So just one on free cash flow just curious what your what.

What would be your expected uses for the next few years I mean your guidance alone has you're kind of getting down to the high twos from a leverage perspective do you feel the need to pay down gross debt from here or do you use cash elsewhere.

Speaker 9: You know, our priorities are fairly similar. CapEx, as we've already defined through the opening narrative.

Our priorities are fairly similar capex.

Capex as we've already defined.

Opening narrative.

Speaker 9: Dividend is extremely important to us, and we are going to be focused, as Julie noted, our ratings have maintained themselves, and we intend to pay down debt and reload powder at this point in time. So it's one of those three categories, capex, dividend, and dividend.

Dividend is extremely important to us and we are going to be focused.

We noted.

Our ratings or maintain themselves and we intend to pay down debt.

We load powder at this point in time, so it's really those three categories, capex dividends and bringing down debt.

Speaker 7: Okay, thanks. That's helpful. And just on ThermoSafe, you know, you guys know you're a record quarter. There's been a lot of movements over the past couple years in terms of where that business goes. Just curious based on what you're seeing in terms of new wins and if we get to a point where there's, you know, say an annual vaccine for COVID or whatever that may be, does that grow the market significantly for you or because of the sales over the last year, it starts to become similar?

Okay. Thanks, that's helpful and just on Thermo Safe you guys noted a record quarter, there's been a lot of movements over the past couple of years in terms of where that business goes just curious based on what youre seeing in terms of new wins and if we get to a point, where there is say an annual vaccine for COVID-19 or whatever that may be.

That grow the market significantly for you or because of the sales over the last year.

Become come similar.

Speaker 12: Yeah, Josh, this is Roger. Yeah, fourth quarter of I'm as strong as we've already said. We should.

Yeah, Josh this is Roger.

Yes fourth quarter volume was strong as we've already said.

We shipped over half a million.

Speaker 9: or sold over half a million shippers for COVID vaccines in the quarter we expect.

<unk> sold over half a million shippers for Covid vaccines in the quarter, we expect that to continue into the first quarter.

Speaker 9: A lot of the current providers of the vaccines are looking at some kind of combined flu, COVID vaccine.

A lot of that.

Current providers of the vaccines are looking at some kind of combined blue Covid vaccine as you know we ship path.

Speaker 9: We ship half of the flu vaccines every year.

Flu vaccines every year.

Speaker 9: United States and some in Europe . So we feel like that's upside and the team's winning good business in other areas around biologics. So we see that volume continue to be strong as we head into 2020.

The United States and some in Europe . So we feel like that the teams went and good business in other areas around biologics.

We see that volume continues to be strong as we head into 2022.

Okay. Thank you.

Speaker 1: Thank you. Our next question comes from the line of Mark Wild with Bank of Montreal. Your line is open.

Thank you. Our next question comes from the line of Mark Wilde with Bank of Montreal. Your line is open.

Speaker 8: Good morning, Howard. Good morning, Julie. Roger.

Okay. Good morning, <unk> morning, Julie Roger Good morning.

Speaker 8: I wanted to just come back to food cans for a couple more minutes. First, Julie, is it possible for you to give us a sense of what your expectations are for both CapEx?

I wanted to just come back to food cans for a couple of more minutes.

Julian is it possible for you to give us a sense of whats your expectations are for both Capex and for the food can volume piece of it.

Speaker 8: And for the food can volume piece of sanokro metal packaging.

Okay.

Metal packaging.

Speaker 3: Yeah, we'll say that we have layered in $25 million into our kind of original $300 million guidance that we talked about in December . So you can imagine we're gonna be actively starting to talk more about that with the MetalTack management team literally next week and how do Howard and Roger have already had some of those discussions.

Yes, I will say that we have layered in $25 million into our kind of original $300 million guidance that we talked about in December so.

You can imagine we're going to be actively starting to talk more about that with the metal Tech management team literally next week and I know Howard and Rodger have already had some of those discussions.

Speaker 3: So, anyway, that's an estimate at this point, but we obviously want to be front-footed, I guess, about investing in that business for growth and productivity.

So anyway, that's an estimate at this point, but we obviously are going to be.

Brett.

So did I guess about.

Investing in that business for growth and productivity and then I'll turn it over to Howard fan I think volume a little more on volume Mark Mark.

Speaker 9: volume, a little more on volume, Mark, if I can. Mark, there's a question. What are we building in for volume for this year? Yeah.

And what are we building them for volume for this year, yes.

Speaker 9: Yeah, the foot cam side, I think slightly down, maybe 2%.

Yes.

Yes, the food can side I think slightly down.

92%.

Speaker 9: from prior year and then on the aerosol side which as a reminder makes up about 35 percent of the business. It's in that let's call it between 4 and 6 percent type of increase.

The prior year and then on the aerosol side.

As a reminder, makes up about 45% of the business.

In that let's call it between 4% to 6% type of inquiries.

Speaker 9: As it relates to what I shared earlier and frankly we did to repeat myself We correlated what we saw at our adhesives and sealants business with the lack of raw materials Availability last year same customers similar customers the bit of a rebuke

As it relates to shared earlier and frankly, we did.

Repeat myself, we correlated but we saw at our adhesives and sealants business with the lack of raw materials availability last year same customer similar customers the better.

A bit of a rebound if you will on the aerosol side.

Speaker 8: I guess, Howard, as a follow-up on that volume in food cans, two things strike me. One is that your biggest competitor in that market is pointing to basically mid-single-digit declines in 2022 because you had a huge year in 2020, and then you had a good follow-on year last year as Packers rebuilt inventory. And then the other element that I'm wondering about is, I think, that all metal packs

Yeah, I guess Howard I, just as a follow up on that volume in food cans two things strike me one is that.

Your biggest competitor in that market is disappointing to basically.

Single digit declines in <unk>.

'twenty two because you had a huge year in 'twenty and then you have a quick follow on your last year's Packers rebuilt inventory and then the other element, but I'm wondering about is I think that all metal pack.

Speaker 8: sold a lot of cans last year to another competitor who has since added capacity. So, I'm just trying to figure out between the market being down and you not having these sort of third-party can sales this year to another player in the market, whether a 2% volume decline is enough of a volume decline.

Sold a lot of cans last year to another competitor who has since added capacity. So I'm just trying to figure out between the market being down and Youre not having these sort of third party Cam sales this year to another player in the market, whether a 2% volume decline.

Is enough of a volume decline.

Speaker 9: Yeah, I'm fully aware of that going into our discussions around this acquisition that there was a lack of available capacity and there was a large player out there by not only domestically but internationally.

Yes, im fully aware of that going into <unk>.

Our discussions around this acquisition that there was a lack of available capacity.

<unk> player out there by not only domestically but internationally.

Speaker 9: That's built into it. Now, as we look customer by customer and we look at share position and other opportunities, and I did note there's new volume that is directly related to food can but not in the food can area.

That's built into it.

No, we look customer by customer and we look at share position and other opportunities and I did note there was new volume.

That is directly related to food can but not in the food can area.

What that will do it.

Speaker 9: counterway of answering a question, but there's a new customer that has been picked up last year that we're still ramping up on.

Counter way of answering a question but.

There's a new customer that has been picked up last year that we're still ramping up on and.

Speaker 8: I'll just leave it at that. I don't want to get into too much detail about it. Yeah, that's fine. That's fine. Just one other thing about food cans, now that you own the business, how do you think about the potential for either further consolidation in North America versus growth outside of North America? And how far would you be willing to stretch for moves in either direction?

I'll just leave it at that I don't want to get too much detail about yes, that's fine that's fine.

Just just one other thing about food costs now that you own the business.

Do you think about the potential for either further consolidation in North America versus growth outside of North America.

And how far would you be willing to stretch for moves in either direction.

Speaker 9: You know, Mark, great question. I think it's part of our attraction to the business that we do think it's important that...

You know.

Mark Great question.

I think it's part of our attraction to the business that we do think is important.

That.

Speaker 9: for the industry. We saw the same thing frankly in our paper can business back in the 80s and 90s where a lot of folks were leaving the business because it was

For the industry, we saw the same thing frankly in our paper business back in <unk>.

A lot of folks.

Sure.

Leaving the business because it wasn't core to them.

Speaker 9: We feel like there's opportunities for us to lean into this more, but our focus right now is leaning into the asset that we have just acquired. And we'll just see what happens. There's a lot of charm global.

We feel like there are opportunities for us to lean into this more but our focus right now is leaning into the asset that we have just acquired.

And we will just see what happens there is a lot of churn globally.

Speaker 9: But right now our focus is on the successful integration of the asset that we have had two weeks under our portfolio.

But right now our focus is on the successful integration of the assets that we have two weeks.

Under our portfolio.

Okay Fair improved response, thanks Howard.

Thanks.

Speaker 1: Thank you. As a reminder, ladies and gentlemen, that's Star 1 to ask the questions.

Thank you and as a reminder, ladies and gentlemen, Thats star one to ask the question.

Speaker 1: Our next question comes from the line of Gabe Heath with Wells Fargo, your line is open.

Our next question comes from the line of Gabe.

Fargo. Your line is open.

Speaker 12: I hate to harp on Sunoco Metal Packaging yet again, but I'm kind of getting to or trying to understand, I guess, in the first quarter, in looking at seasonality of

Hey, good morning, Howard Rodger Julie.

I hate to harp on this.

Sunoco metal packaging, yet again, but.

I'm kind of getting to or trying to understand.

Yes in the first quarter.

And looking at seasonality of <unk>.

Speaker 12: snow co-historically and that Q1 is typically the smallest earnings quarter. Yet they implied guidance kind of themes to suggest lower earnings. And then again, this is kind of despite the fact that Q3 should be a little bit bigger with the vegetable harvest impact.

Sonoco historically and that Q1 is typically the smallest earnings quarter.

Yet the implied guidance seems to suggest lower earnings and then again. This is kind of despite the fact that Q3 should be a little bit bigger.

With the vegetable harvest impact so I'm curious I guess I suppose. The question is are you embedding anything in Q1 for for metal gains or lower cost inventory that got carried over that will be sold at a higher price in Q1.

Speaker 12: I'm curious if the question is, are you embedding anything in Q1 for metal gains or lower cost inventory that got carried over that will be sold at a higher price in Q1?

Speaker 3: Oh, yeah. Hey, Gabe. Yeah, absolutely. I mean, price cost in Q1 really is a key driver to profitability and our outlook. So we obviously, we have an outlook preliminary for the balance of the year and again, are just beginning to scrub the metal packaging numbers.

Yes, Hey, Gabe.

Yeah, absolutely I mean price cost in Q1 really is a key driver to profitability and in our outlook. So.

We obviously, we have an outlook preliminary for the balance of the year and again are just beginning described that metal packaging numbers really beyond Q1 with that team, but yes absolutely.

Q1 is very solid from a price cost perspective, and you are right about that right we're bringing in.

Selling inventory that was purchased at lower prices last year, especially from up from a steel perspective. So.

Speaker 4: So, you know, I'd say more to come as we continue sharpening our pencil with the new business and how we see that outlook for the year. But again, you know, you are right that as we start the year, you know, we have a lot of, you know, some nice price-cost upside here in the first quarter. Yeah, and, Gabe, let me just expand on that, and that's across our portfolio. So, you know, let me get back to, you know, I think a big part of your question was seasonality. One of the other aspects of this, if you look at our legacy non-process can business, it's stronger seasonally.

Yeah, I would say more to come as we continue sharpening our pencil with the new business and how.

We see that outlook for the year, but again you are right that as we start the year.

We have a lot of.

Some nice price cost upside here in the first quarter.

And let me just expand on that and that's across our portfolio.

Speaker 9: So...

So.

Speaker 9: But let me get back to, I think, a big part of your question was seasonality. One of the other.

Let me get back to I think.

A big part of your question about seasonality.

On the other.

Speaker 9: Aspects of this if you look at our legacy non-profit can business its strongest period is on the end of the third quarter beginning of the fourth quarter.

Aspects of this if you look at our legacy non process can business.

<unk> strongest.

Period is in the end of the third quarter beginning of the fourth quarter.

Speaker 9: That was not missed on us as we looked at the seasonality of this business. On the food side, Aerosol is fairly well flat throughout the year, but we're going to see a benefit, I think, from a seasonality perspective in the can business that will be stronger in those spring-summer periods where we are relatively weak.

That was not necessarily on us as we look that the.

The seasonality of this business on the foods.

Aerosols for fairly well flat.

Half of the year.

We're going to see a benefit I think from a seasonality perspective in the can business that will be stronger in the spring summer periods, where were relatively weaker.

Speaker 9: and our legacy non-processed business. So actually, as we pull these two businesses together.

And our legacy non process business so it.

Actually as we pull these two.

Two businesses together.

Speaker 9: see a more smoother relationship on an annualized.

See a more smoother relationship.

On an annualized basis.

Speaker 12: All right. Thank you. And then I guess I know it's somewhat real time, but I've seen some announcements from some of the large auto manufacturers. I know it's a small business within all other, but turning off some some vehicle production and then with the trucker issues that we're seeing on the U.S. Canadian border, anything embedded in Q1 or I guess in real time thoughts on how it could impact that business and all other.

Alright. Thank you and then I guess I know, it's somewhat real time, but it.

Seen some announcements from some of the large auto manufacturers I know, it's a small business within all other but.

Turning off some some vehicle production and then with the trucker.

Issues that we're seeing in the U S Canadian border.

Anything embedded in Q1, or I guess again real time thoughts on how it could impact.

That business and all other.

Speaker 12: This is Roger. We've got to have that included in our guys. We've been pretty conservative on the number of vehicles sold.

Okay. This is Roger.

We've got to have that included in our guidance, we've been pretty conservative on the number of vehicles sold in the U S. As we rolled into 2022 based on our supply from our molded foam groups.

Speaker 12: 22 based on our supply from our molded foam group. So I wouldn't see any major impact to the first quarter but it is still a challenge. It is certainly still a challenge and we've also seen some challenges and the white goods industry which

I wouldn't see any major impact to the first quarter.

But it is still a challenge it is certainly still a challenge and we've also seen some challenges in the white goods industry, which is our paper based protective.

Speaker 12: business that sells into the white goods industry so we've seen some challenges there But it's all built into the guidance. I don't think you see anything

Business that sells into the white goods industry. So we've seen some challenges there.

But it's all built into the guidance I don't think you've seen anything unusual.

Alright. Thank you good luck.

Thank you.

Speaker 1: We have a follow-up from the line of Adam Josephson with T-Bank. Your line is open.

We have a follow up from the line of Adam Josephson with Keybanc. Your line is open.

Speaker 6: Howard, Julie, thanks for taking my call. It's just one on back to the consumer businesses. Howard, how do you think about the COVID?

Tower, Julie Thanks for taking my follow ups, just one on back to the consumer businesses Howard how do you think about the COVID-19 .

Speaker 6: impact on demand and both the legacy consumer business.

Impact on demand in both the legacy consumer business.

Speaker 6: and the Sunoco Metal Pack business and how they might differ. And because we're obviously seeing CPG volumes normalize in recent months. And I'm just wondering if you think Sunoco Metal Pack was any greater a beneficiary from COVID than your legacy consumer business and how that played into your thinking in terms of the acquisition.

And the Sunoco metal pack business and how they might differ in because we're obviously seeing CPG volumes normalize in recent months and I'm. Just wondering if you think sonoco metal pack was any greater a beneficiary from COVID-19 than you are.

Our legacy consumer business and how that played into your thinking in terms of the acquisition.

Okay.

It's hard for me to really.

Speaker 9: to answer that. Let me give it a quick thought here. Well, what I would say is that we did see the strongest period.

Did I answer that let me give it a quick follow up here what I would.

Well, what I would say is that we.

We did see the strongest period I guess.

Speaker 9: I guess in the mid last year or so on our consumer.

Yes.

Mid last year or so on our consumer business.

Speaker 9: What we're happy with, pleased with, what we said at the time is it's a one and done. If we look and compare this coming year to 2019, we're actually seeing exactly what we had hoped. It was what our customers were telling us, that new consumers have now found the space and there's going to be a...

We're happy with pleased with what we said at the time is this a one and done.

If we look and compare this coming year for 2019, we're actually seeing exactly what we would expect we have hosted with what our customers were telling us that new consumers have now.

<unk> found.

Found the space.

And there's going to be a sustainable pick up then yes, we are still kind of in cogan.

Speaker 9: Yes, we're still kind of in COVID, but I'm really pleased to see that from 2019 to our forecast into 2022, we're actually, you know, ahead of where we historically have been. So that's kind of holding true. In fact, we also have, you know, certain businesses that continue to increase, such as our trade business,

I'm really pleased to see that from 2019 to our forecast into 2022 were actually.

Ahead of.

Where we historically had been so that's kind of holding true.

We also have.

Certain businesses that continue to increase such as our trade business.

Speaker 9: related to that as well as new business awards and as it relates to the metal side of the business

Related to that as well as new business Awards.

And as it relates to the metal side of the business.

Speaker 9: You know, the multiple years we look back, there were a couple of categories that jumped significantly. You can think of products that were for disinfectants.

The multiple years, we look back there were a couple of categories that jumped significantly you can think of products that were for disinfectant.

Speaker 9: And yes, those are going to come down and then we bottle those down accordingly to more traditional levels as we went through the

And yes, those are going to come down and we've modeled those down accordingly to more traditional levels.

We went through the.

The due diligence ports of the acquisitions.

Yes.

Speaker 9: Lori talked about what we expect for next year and feel very.

I've already talked about what we expect for next year and feel very comfortable with that.

Speaker 6: Appreciate that. And just one other question on the accounting change, which is, you know, what you'll report in terms of adjusted EPS is a form of cash EPS, if you will, you know, and obviously investors can see your your free cash flow, so they know what what what you're doing in terms of free cash flow. So I guess why the need to report something like a cash EPS?

And I appreciate that and just one other question on the accounting change, which is what Youll report in terms of adjusted EPS as a form of cash EPS. If you will.

And obviously investors can see your free cash flow. So they know what what what youre doing in terms of free cash flow. So I guess why the need to report something.

Like a cash EPS.

Speaker 6: you know, which distorts, you know, PE multiple comparisons to where you've traded historically, as well as to some of your peers that have not made this change to exclude amortization.

Distorts p/e multiple comparisons where you've traded historically as well as to some of your peers that have not made this change to exclude.

Amortization of acquisition intangibles.

Speaker 9: You know, when we looked at that, Adam, you know, particularly as we surveyed and looked out at our consumer peer group and found that we're an anomaly and not.

When we look for that Adam.

Particularly as we surveyed and looked out at our consumer peer group and found that we are anomaly and not reporting as we are starting to report.

Speaker 9: reporting as we are starting to report. So I think it's important. I've actually seen analyst reports where comparing performances on a percentage basis over periods of time, and maybe not realizing that one is recognizing intangibles and the other is not. So we just felt like we wanted to be aligned with, as we've grown our consumer business to over 50% of our portfolio, to be aligned in that.

I think it's important I've actually seen analysts' reports were comparing performances.

On a percentage basis over periods of time.

And maybe not realizing that one is recognized and intangibles and the other is not so we just felt like we wanted to be aligned with.

We've grown our consumer business to over 50% of our portfolio to be aligned in that way and in a secondary issue as well.

Speaker 9: And, you know, and a secondary issue is we really couldn't be talking to you intelligently about the impact of the BMP acquisition today being two weeks into it and purchase accounting is not going to be completed for some period of time now. So it felt right in terms of aligning ourselves up with the rest of our peers and it felt right to be able to have this conversation with you guys of how material we're looking at this acquisition today.

We really couldnt be talking to you intelligently about.

The impact of the DMT acquisition today, even two weeks into it and purchase accounting is.

It's not going to be completed for some period of time now so it felt like in terms of aligning ourselves up with the rest of our peers.

And it felt like to be able to have this conversation with you guys.

How material were looking at this acquisition today.

Got it thanks, so much Howard the silicon in the quarter.

Great. Thanks.

Speaker 10: Thank you.

Thank you.

Speaker 1: I'm showing no further questions in the queue. I would now like to turn the call back over to Roger for closing remarks.

I am showing no further questions in the queue I would now like to turn the call back over to Roger for closing remarks.

Speaker 8: Thank you again. Let me thank everybody for joining us today. We certainly appreciate your interest in the company, and as always, if you have any further questions, please don't hesitate to reach out.

Thank you again.

Let me thank everybody for joining us today, we certainly appreciate your interest in the company is always do you have any further questions. Please don't hesitate to reach out and contact us. Thank you.

Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.