Q2 2024 Sonoco Products Co Earnings Call

Good day and thank you for standing by. Welcome to the Q2 2024 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.

Operator: 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Operator: At this time, while participants aren't in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

Lisa Weeks: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Operator: Please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Lisa Weeks: I would now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Lisa Weeks: Thank you, Operator, and thanks to everyone for joining us today for Sonoco's second quarter earnings call. Last evening, we issued a news release highlighting our financial performance for the second quarter, and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at Sonoco.com. As a reminder, today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainty. Therefore, actual results may differ materially.

Lisa Weeks: Thank you, Operator, and thanks to everyone for joining us today for Sonoco's second quarter earnings call. Last evening, we issued a news release highlighting our financial performance for the second quarter, and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at Sonoco.com. As a reminder, on today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainty. Therefore, actual results may differ materially.

Lisa Weeks: Please take a moment to review the forward-looking statements on page 2 of the presentation. Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial conditions and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions, as well as reconciliations to GAAP measures, is available under the Investor Relations section of our website.

Lisa Weeks: As a reminder, today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections.

Lisa Weeks: Please take a moment to review the forward-looking statements on page 2 of the presentation. Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial conditions and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions, as well as reconciliation to GAAP measures, is available under the Investor Relations section of our website.

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

Lisa Weeks: Joining me this morning are Howard Coker, President and CEO; Rob Dillard, Chief Financial Officer; and Roger Fuller, Chief Operating Officer. For today's call, we will have prepared remarks regarding our results for the quarter and our outlook for the third quarter, followed by a question-and-answer session.

Lisa Weeks: Joining me this morning are Howard Coker, President and CEO, Rob Dillard, Chief Financial Officer, and Rodger Fuller, Chief Operating Officer. For today's call, we will have prepared remarks regarding our results for the quarter and our outlook for the third quarter, followed by a question and answer session. If you will please turn to page five in our presentation, I will now turn the call over to our CEO, Howard Coker, for business updates. Thank you, Lisa. Good morning, everyone.

Howard Coker: If you will please turn to page 5 in our presentation, I will now turn the call over to our CEO, Howard Coker, for business updates.

Speaker Change: If you will please turn to page 5 in our presentation, I will now turn the call over to our CEO , Howard Coker, for business updates.

Howard Coker: Thank you, Lisa.

Howard Coker: Good morning, everyone, and thank you for joining our call today. As we announced late yesterday, we had a solid quarter where we delivered sequential improvement and adjusted EBITDA. In the second quarter, sales were 1.6 billion. Adjusted EBITDA was 262 million, and EBITDA margins remained strong at 16%. Our adjusted earnings per share were $1.28. An operating cash flow was $109 million. These results reflect improved industrial volumes on a year-over-year basis, mixed with some continued softness and consumer sales. During the quarter, we had continued price-caused headwinds across the portfolio, primarily in industrials, that we believe will improve in the second half.

Howard Coker: And thank you for joining our call today. As we announced late yesterday, we had a solid quarter where we delivered sequential improvement and adjusted EBITDA. In the second quarter, sales were $1.6 billion, adjusted EBITDA was $262 million, and Eva Dahm Origins remained strong at 16%. Our adjusted earnings per share were $1.28, and operating cash flow was $109 million. These results reflect improved industrial volumes on a year over year basis, mixed with some continued softness and consumer. During the quarter, we had continued price cost headwinds across the portfolio, primarily in industrials, that we believe will improve in the second half. Productivity in the second quarter came in at $51 million, continuing our strong operating performance, bringing our first half productivity total to just over $100 million. All in all, another good quarter from the Sonoco team.

Howard Coker: Thank you, Lisa. Good morning, everyone. And thank you for joining our call today. As we announced late yesterday, we had a solid quarter. Where we deliver sequential improvement and adjusted EBITDA and our.

Speaker Change: In the second quarter, sales were $1.6 billion, adjusted EBITDA was $262 million, and EBITDA margins remained strong at 16%.

Howard Coker: During the quarter, we had continued price cost headwinds across the portfolio, primarily in industrials, that we believe will improve in the second half.

Howard Coker: Productivity in the second quarter came at $51 million, continuing our strong operating trends, and bringing our first half productivity total to just over $100 million.

Howard Coker: Productivity in the second quarter came in at $51 million.

Howard Coker: continuing our strong operating trends.

Howard Coker: All in all, another good quarter from the Sanucotain.

Howard Coker: If you'll please turn to page 6, let me now update you on recent progress with our near-term strategic priorities. As always, we're fully committed to operating with discipline. Our productivity results in the first half of the year for over $100 million. These figures are had a schedule to our expectations for the year; they were not by chance. As you know, we have doubled internal cat facts in the last three years, targeted towards value driving growth and productivity projects. We continue to make high return investments to drive better and more efficient manufacturing projects. And those investments are paying on our serve of actions to improve productivity from the right capital allocation, portfolio simplification, and strong expense management.

Howard Coker: If you'll please turn to page 6, let me now update you on recent progress with our near-term strategic priorities. As always, we're fully committed to operating with productivity results in the first half of the year for over $100 million. These figures are ahead of schedule compared with our expectations for the year. They were not by chance.

Howard Coker: All in all, another good quarter from the Sonoco.

Howard Coker: taint.

Howard Coker: As you know, we have doubled internal CapEx in the last three years, targeted towards value-driving growth and productivity projects. They continue to make high return investments to drive better and more efficient manufacturing processes, and those involved are paying off. Our assertive actions to improve productivity from the right capital allocation and Portfolio Simplification continue to yield results, and I couldn't be more pleased with the efforts from the entire Sonoco team. We also continue to invest strategic capital and innovation to support organic growth and sustainability. At the recent Environmental Packaging Live event, we were awarded the 2024 Gold Award in Snacks and Confectionery Packaging and the Silver Award. Sustainable Packaging Innovation For a greater than 90, Paper Pringles can.

Howard Coker: As you know, we have doubled internal CapEx in the last three years, targeted towards value-driving growth and productivity projects.

Howard Coker: They continue to make high return investments to drive better and more efficient manufacturing processes.

Howard Coker: And those investments are paying off.

Howard Coker: Continue to yield results, and I couldn't be more pleased with the efforts from the entire Sonoco team. We also continue to invest strategic capital and innovation to support organic growth and sustainability initiatives.

Howard Coker: Portfolio Simplifications

Howard Coker: and Strong Expense Management.

Howard Coker: continue to yield results and I couldn't be more pleased with the efforts from the entire Sonoco team.

Howard Coker: At the recent Environmental Packaging Live event, we awarded the 2024 Gold Award and Snacks and Confectionery packaging and a Civil Award for Sustainable Packaging Innovation for greater than 90% paper fringles can design. We're delighted to be recognized for our proprietary designs that help our customer achieve their sustainability packaging goals. This new design has been rolled out on store shelves across Europe and will be launched internationally in the near future.

Howard Coker: At the recent Environmental Packaging Live event, we were awarded the 2024 Gold Award in Snacks and Confectionery Packaging.

Howard Coker: and a silver award.

Howard Coker: for Sustainable Packaging Innovation for greater than 90%

Howard Coker: We're delighted to be recognized for our proprietary designs that help our customers achieve their sustainability packaging goals. This new design is being rolled out on store shelves across Europe and will be launched internationally in the near future. Regarding high-return capital investments, we're pleased to announce the acquisition of EViosis in late June, representing an important milestone in our strategy to scale our canned package. The approval and review processes are well underway, and Rodger and his team are making great progress on planning for a seamless integration.

Howard Coker: Paper, Pringles, Candeson.

Howard Coker: This new design is being rolled out in store shelves across Europe and will be launched internationally in the near future.

Howard Coker: Regarding high return capital investments, we're pleased to announce the acquisition of EVO's and late June, representing an important milestone in our strategy to scale our canned packaging platform. The approval of the review processes is well underway, and Roger and team are making great progress on planning for a seamless integration. Based on the current schedule, we expect to close the transaction in the fourth quarter of 2024. If you'll turn to page 7, the EVO's. We're excited to expand our footprint and global capable abilities to address the increased demand for innovation and the growing expectations for the highest levels of customer service.

Howard Coker: Regarding high return capital investments, we are pleased to announce the acquisition of Eviosis in late June , representing an important milestone in our strategy to scale our canned packaging business.

Howard Coker: platform.

Howard Coker: Based on the current schedule, we expect to close the transaction in the fourth quarter of 2024. Turning to page 7, at Theviosus, we're excited to expand our footprint and global capabilities to address the increased demand for innovation. With growing expectations for the highest levels of customer service, the addition of aviosis will position us as one of the leading food can and aerosol packaging manufacturers globally. And it represents a platform from which we can drive differentiated value in the market by leaning into service, quality, and innovation. The absolute hallmark of a successful Sonoco business.

Howard Coker: Based on the current schedule, we expect to close the transaction in the fourth quarter of 2024.

Howard Coker: If you'll turn to page 7.

Howard Coker: With EVOSYS, we're excited to expand our footprint and global capabilities to address the increased demand for innovation and meet growing expectations for the highest levels of customer service.

Howard Coker: The addition of EVO's will position us as one of the leading food can and aerosol packaging manufacturers globally, and it represents a platform we can drive differentiated value in the market. By leaning into service, quality and innovation, the absolute hallmark of successful snooker dozens. To the combination of our existing innovations and infrastructure and EVO's technical advanced and well invested manufacturing footprint will be a more effectively serve both existing and new customers and unlock new opportunities and attractive end markets and geographies. We've initially identified meaningful near-term operating and procurement synergies that should drive roughly $100 million annually, and this does not include expected commercial and innovation synergies.

Howard Coker: The addition of EBIOSIS will position us as one of the leading food can and aerosol packaging manufacturers globally, and it represents a platform where we can drive differentiated value in the market.

Howard Coker: By leaning into service, quality, and innovation, the absolute hallmark of successful Sonoco businesses.

Howard Coker: The combination of our existing innovation infrastructure and EBS's technically advanced and well-invested manufacturing footprint will be a more effectively serve both existing and new customers and Unlock New Opportunities in Contractors and Markets in Geography. We've initially identified meaningful near-term operating and procurement synergies that should drive roughly $100 million annually. And this does not include expected commercial and innovation. The financial profile of this combination is compelling. The transaction will be immediately accretive to earnings and cash flow.

Howard Coker: There's a combination of our existing innovations, infrastructure, and EBS's technical advance and well-invested manufacturing footprint.

Howard Coker: will be a more effectively serve both existing and new customers.

Howard Coker: Unlocked New Opportunities in Contractors and Markets in Geography

Howard Coker: We've initially identified meaningful, near-term operating and procurement synergies that should drive roughly $100 million annually.

Howard Coker: The financial profile of this combination is compelling. The transaction will be immediately accretive to earnings and cash flow, and first year returns are expected to be well in excess of our cost. The most importantly, it gives a strong, a powerful operating platform from which to advance both commercial and operating improvements. It will help us continue to drive sustainable value and returns to our shareholders. Further demonstrating the strength of our clear and dynamic capital allocation process. Our businesses continue to identify and bring forward exciting opportunities for value-generating investments. The clarity of our dynamic process will continue to support these opportunities where Sonoco can generate the strongest return and value proposition for shareholders.

Howard Coker: This does not include expected commercial and innovation synergies.

Howard Coker: And first-year returns are expected to be well in excess of our cost of skyrocketing. But most importantly, it gives us a strong, Powerful Operating Platform that will help us continue to drive sustainable value and returns to our shareholders, further demonstrating the strength of our clear and dynamic capital allocation process. Our businesses continue to identify and bring forward exciting opportunities for value creation. Through the clarity of our dynamic process, we will continue to support these opportunities so that Sonoco can generate the strongest return.

Howard Coker: The transaction will be immediately accretive to earnings and cash flow, and first-year returns are expected to be well in excess of our costless capital.

Howard Coker: But most importantly, it gives a strong

Howard Coker: from which to advance both commercial and operating improvements.

Howard Coker: It will help us continue to drive sustainable value and returns to our shareholders.

Howard Coker: Further demonstrating the strength of our clear and dynamic capital allocation process.

Howard Coker: Our businesses continue to identify and bring forward exciting opportunities for value generating investments.

Howard Coker: To the clarity of our dynamic process, we will continue to support these opportunities.

Howard Coker: Value Proposition for Shareholders. And you will see us continue to distance ourselves from businesses that do not regularly offer the same opportunities. We view capital allocation as the heart of our strategic planning process to generate increased value for our shareholders, and we'll keep you fully posted on our progress. With that update, I'm going to turn it over to Rob to talk about. Thanks, Howard.

Howard Coker: where Sonoco can generate the strongest return.

Howard Coker: And you will see us continue to distance ourselves from businesses that do not regularly offer the same opportunities. If you capital allocation as a part of our strategic planning process to generate increased value for our shareholders, and we'll keep you fully posted on our progress.

Howard Coker: and Value Propositions for Shareholders.

Howard Coker: And you will see us continue to distance ourselves from businesses that do not regularly offer the same opportunities.

Howard Coker: We view capital allocation as the heart of our strategic planning process to generate increased value for our shareholders, and we'll keep you fully posted on our progress.

Rob Dillard: With that update, I'm going to turn it over to Rob to talk about financials for the fourth. Rob?

Howard Coker: With that update, I'm going to turn it over to Rob to talk about the financials for the board.

Rob Dillard: I'm pleased to present the second quarter 2024 financial results starting on page nine of this presentation. Please note that all results are on an adjusted basis and all growth metrics are on a year-over-year basis, unless otherwise stated. The Gap to Non-Gap EPS Reconciliation is in the appendix of this presentation, as well as in the press release.

Rob Dillard: Thanks, Howard.

Rob Dillard: I'm pleased to present the second quarter, 2024 financial results starting on page nine of this presentation. Please note that our results are on an adjusted basis, and all growth metrics are on a year-over-year basis and less otherwise stated. The gap to non-gap EPS reconciliation is in the appendix of this presentation, as well as in the press release. As Howard said, we continue to deliver resilient financial results through our enduring operating model and strong market positions. Adjusted EPS was $1.28, which was within our guidance range and exceeded the consensus analyst estimates. This result was driven by positive productivity of $0.38 per share and positive volume mix of nine cents per share, also by negative price cost of $0.37 per share.

Howard Coker: Rob. Thanks, Howard. I'm pleased to present the second quarter 2024 financial results starting on page 9 of this presentation.

Rob Dillard: That's Howard said, continue to deliver resilient financial results through our enduring operating model and strong market position. Adjusted EPS was $1.28, which was within our guidance range and exceeded the consensus annual assessment. This result was driven by positive productivity of $0.38 per share and positive volume mix of $0.09 per share, all set by a negative price cost of $0.37. In sequentially, we drove 14% growth in EPS growth through 5 cents of volume mix, 11 cents of price cost, and 8 cents of productivity, which was partially offset by 11 cents of specific other cost. For the quarter, net sales decreased 4.8% to $1.62 billion due to negative contractual resets in price and negative $101 million of strategic actions to exit or divest non-strategic positions.

Rob: Adjusted EPS was $1.28, which was within our guidance range and exceeded the consensus analyst estimates.

Rob: This result was driven by positive productivity of $0.38 per share and positive volume mix of $0.09 per share.

Rob Dillard: Sequentially, we drove 14 percent growth EPS growth through five cents of volume mix, 11 cents of price costs, and 8 cents of productivity, which was partially offset by 11 cents of specific other costs. For the quarter, net sales decreased 4.8 percent to 1.62 billion due to negative contractual resets and price, and negative 101 million of strategic actions to exit or to vest non-strategic positions.

Speaker Change: Sequentially, we drove 14% growth, EPS growth, through 5 cents of volume mix, 11 cents of price cost, and 8 cents of productivity, which was partially offset by 11 cents of specific other costs.

Howard Coker: For the quarter, net sales decreased 4.8% to $1.62 billion due to negative contractual resets in price and negative $101 million of strategic actions to exit or divest non-strategic positions.

Rob Dillard: Excluding these strategic actions, net sales would have grown 1.1 percent. We believe that divesting the protective solution business, exiting non-profitable thermoforming markets, and reclassifying the recycling business will increase our ability to focus and execute our strategy. It's notable that volume mix was positive low single digits in the quarter, as low single digit volume increases in consumer, and double digit volume increases in industrial overcame declines in all other. Organic volume mix was flat, as low single-digit increases in industrial, also at low single-digit declines in consumer and declines in all other. We continue to experience negative contractual resets and price as paper, metal, and some resin benchmarks have declined from their peak.

Rob Dillard: Excluding these strategic actions, net sales would have grown 1.5%. We believe that divesting the protective solution business, exiting non-profitable thermoforming markets, and reclassifying the recycling business will increase our ability to focus and execute our strategy. It's notable that volume mix was positive low single digits in the quarter as low single digit volume increases in consumer and double digit volume increases in industrial overcame declines in all other. However, organic volume mix was flat as low single digit increases in industrial offset low single digit declines in consumer and declines in all other.

Howard Coker: Excluding these strategic actions, net sales would have grown 1.1 percent.

Howard Coker: We believe that divesting the protective solution business, exiting non-profitable thermoforming markets, and reclassifying the recycling business will increase our ability to focus and execute our strategy.

Speaker Change: It's notable that Volume X was positive low single digits in the course.

Rob Dillard: We continue to experience negative contractual resets on price as paper, metal, and some resin benchmarks have declined from their. In the quarter, price impacted sales negatively by 32%. We anticipate that year-over-year price comparisons will improve as the year progresses. Adjusted EBITDA was $262 million, and adjusted EBITDA margin was $16.2 billion.

Rob Dillard: In the quarter, price-impacted sales negative 32 million. We anticipate the year-over-year price comparisons will improve as the year progresses. Adjusted EBITDA with 262 million, and adjusted EBITDA margin was 16.2%. Specific other expenses that we believe were one time in nature were higher 23 million due to increased employee expenses, bad debt reserves, and other accruals.

Howard Coker: In the quarter, price impacted sales negative $32 million.

Rob Dillard: Specific other expenses that we believe were one-time in nature were higher by 23 million due to increased employee expenses, bad debt reserves, and other accruals. For a year over year comparison, EBITDA margin would have been 17.6%, including these specific other. This gives us conviction in our expectation that EBITDA margins will improve in Q3, as we expect volume mix and productivity to improve, and Volumix price, cost, and productivity to improve on a sequential basis Despite challenging price calls. From an EBITDA perspective, Volume X was a positive 5 million. This was the first positive organic volume mix for EBITDA in eight quarters. Productivity was positive by 51.

Howard Coker: Specific other expenses that we believe were one-time in nature were hired $23 million due to increased employee expenses, bad debt reserves, and other accruals.

Rob Dillard: For a year of year comparable, EBITDA margin would have been 17.6% excluding these specific other expenses. This gives us conviction in our expectation that EBITDA margins will improve in Q3 as we expect volume X and productivity to improve, and volume X price cost and productivity to improve on a sequential basis. In the second quarter, we achieved historically strong profitability through improving volume X and strong productivity, despite challenging price cost. From an EBITDA perspective, volume X was positive 5 million in the quarter. This was the first positive organic volume X for EBITDA in 8 quarters. Productivity was positive 51 million in the quarter.

Howard Coker: For a year-over-year comparable, EBITDA margin would have been 17.6%, excluding these specific other expenses.

Rob Dillard: In the last 12 months, we have achieved over 180 million of productivity. We believe that this performance is an indication that our strategy of investing to drive earnings growth through productivity is working, and we anticipate that this trend of positive productivity will continue. Price cost was negative 49 million, primarily due to industrial. We anticipate that price cost will improve as the year progresses.

Rob Dillard: In the last 12 months, we have achieved over 180 million in productivity. We believe that this performance is an indication that our strategy of investing to drive earnings growth through productivity is working, and we anticipate that this trend of positive productivity will continue. Price cost was negative 49 million, primarily due to industr. We anticipate that price costs will improve as the year progresses.

Howard Coker: In the last 12 months, we have achieved over $180 million of productivity. We believe that this performance is an indication that our strategy of investing to drive earnings growth through productivity is working, and we anticipate that this trend of positive productivity will continue.

Howard Coker: Price-cost was negative $49 million, primarily due to industrial.

Rob Dillard: Page 10 of our Consumer Results Segment. Our consumer businesses continue to improve profitability through productivity and commercial execution despite uneven volume. Demand is improving, but promotions at retail have yet to stimulate demand to legacy trends across all sectors. Consumer net sales decreased 4% to $928 million.

Rob Dillard: Page 10 as our consumer result, segment results. Our consumer businesses continue to improve profitability through productivity and commercial execution, despite uneven volume. Demand is improving, but promotions at retail have yet to stimulate demand to legacy trends across all sectors. Consumer net sales decreased 4% to 928 million. Consumer volume X increased low single digits due to the NFL acquisition and positive organic volume X and flexible and metal packaging. Consumer price decreased 2% due to contractual price reset. We expect these pricing terms to continue for the remainder of the year. Consumer EBITDA increased 11% to 148 million, primarily due to improved productivity.

Howard Coker: We anticipate that price costs will improve as the year progresses.

Howard Coker: Page 10 of our consumer segment results.

Howard Coker: Our consumer businesses continue to improve profitability through productivity and commercial execution despite uneven volume.

Howard Coker: Demand is improving, but promotions at retail have yet to stimulate demand to legacy trends across all sectors.

Rob Dillard: Consumer volume mix increased below single digits due to the NFL acquisition and positive organic volume mix and flexibles and metal packaging. Consumer price decreased 2% due to contractual price re, We expect these pricing terms to continue for the remainder of Consumer EBITDA increased 11% to 148 million primarily due to improved productivity. Our capital investments in consumers are generating meaningful results, and the first sequence of investments from one to two years ago was a primary driver for the improvement of productivity to 25 million.

Howard Coker: Consumer volume mix increased below single digits due to the NFL acquisition and positive organic volume mix and flexibles and metal packaging.

Howard Coker: Consumer price decreased 2% due to contractual price recess.

Howard Coker: We expect these pricing trends to continue for the remainder of the year.

Howard Coker: Consumer EBITDA increased 11%.

Rob Dillard: Our capital investments in consumer are generating meaningful results, and the first sequence of investments from 1 to 2 years ago was a primary driver for the improvement of productivity to 25 million. Consumer EBITDA margin increased 216 basis points to 15.9%. We anticipate that EBITDA margins will increase in Q3, as volumes continue to normalize and metal packaging enters its primary pack season. On a more granular level, RPC sales to kind of a single digits due to low single digit volume x decline. We anticipate that this will continue through the balance of the year, and we are taking appropriate actions to ensure profitability.

Howard Coker: to $148 million, primarily due to improved productivity.

Howard Coker: Our capital investments in consumer are generating meaningful results, and the first sequence of investments from one to two years ago was a primary driver for the improvement in productivity to $25 million.

Rob Dillard: Consumer EBITDA Margin Increased 216 Basin, 15.9. We anticipate that EBITDA margins will increase in Q3 as volumes continue to normalize and metal packaging enters its primary packaging. On a more granular level, RPC sales declined low single digits due to low single digit volume. We anticipate that this will continue through the balance of the year, and we are taking appropriate actions to ensure profitability. TFP sales decreased mid-single digits as positive mid-single-digit organic volumes influx. [inaudible] Metal packaging sales decreased mid-single digits as positive low single digit volume mix was offset by negative contractual price reset. Volume mix was positive for both food and air.

Howard Coker: On a more granular level, RPC sales declined low single digits due to low single digit volume mix decline.

Rob Dillard: TFP sales decreased mid single digits as positive mid single digit organic volumes and flexible and strong acquisition performance from NFL partially offset the impact of the exit of a non-profitable thermoforming market. Metal packaging sales decreased mid single digits as positive worth single digit volume X was offset by negative contractual price reset. Staphos, volume mix was positive in both food and aerosols. We expect metal packaging volume mix to increase double digits in the third quarter. Volume mix was positive mid single digits, excluding one time customer reserves and Q2. While metal packaging price was negative on a sales basis, on an EBITDA basis, price cost was meaningfully positive.

Howard Coker: and Strong Acquisition Performance from Inapel partially offset the impact of the exit of a non-profitable thermoforming market.

Rob Dillard: We expect metal packaging volume mix to increase double digits in the third quarter. Volume mix was positive mid-single digits, excluding one-time customer reserves in Q2. While the metal packaging price was negative on a sales basis, on an EBITDA basis, price cost was meaningfully positive. We expect positive price calls on an EBITDA basis and metal packaging for the remainder of the year. Page 11 is our industrial segment. Industrial market conditions are improving, and while we are optimistic, we believe that we are still in a U-shaped industrial market and that there has not yet been a broad-based market recovery. Industrial Sales increased 3% to $601 million, Volume increased 10%, and Organic Volume Mix increased 2%. These results include the reclassification of recycling, which reduced sales by $23 million in the quarter.

Howard Coker: We expect Metal Packaging Volume Mix to increase double digits in the third quarter. Volume Mix with positive mid-single digits excluding one-time customer reserves in Q2.

Howard Coker: While metal packaging price was negative on a sales basis, on an EBITDA basis, price cost was meaningfully positive.

Rob Dillard: We expect positive price cost on an EBITDA basis and metal packaging for the remainder of the year.

Rob Dillard: Hage 11 has our industrial segment results. Industrial market conditions are improving, and while we are optimistic, we believe that we are still in a U-shaped industrial market trend, and that there has not yet been a broad-based market recovery. Industrial sales increased 3% to 601 million; volume increased 10%, and organic volume mix increased 2%. These results include the reclassification of recycling, which reduced sales by 23 million in the quarter. Adjusted for the impact of recycling reclassification, industrial sales would have increased 7%. Industrial price decreased 2% due to contractual price reset. Industrial EBITDA was 98 million due to 47 million of negative price costs, offsetting 23 million of productivity and 15 million of positive volume mix.

Howard Coker: We expect positive price calls on an EBITDA basis in metal packaging for the remainder of the year.

Howard Coker: Page 11 has our industrial segment results.

Howard Coker: Industrial market conditions are improving and while we are optimistic we believe that we are still in a u-shaped industrial market trend.

Howard Coker: Industrial sales increased 3% to $601 million, volume increased 10%, and organic volume mix increased 2%.

Howard Coker: These results include the reclassification of recycling, which reduced sales by $23 million in the quarter. Adjusted for the impact of recycling reclassification, industrial sales would have increased 7 percent.

Rob Dillard: Adjusted for the impact of recycling reclassification, industrial sales would have increased 7%, industrial prices decreased 2%, and Industrial EBITDA was $98 million, due to $47 million of negative price costs, offsetting $23 million of productivity and $15 million of positive volume. Between 2019 and the end of 2023, industrial price costs increased 184 million, and year-to-date in 2024, industrial price costs decreased $102 million. We believe that we are now close to a balanced price-cost ratio and that future trends will be positive based on strategic pricing.

Howard Coker: Industrial EBITDA was $98 million, due to $47 million of negative price cost, offsetting $23 million of productivity and $15 million of positive volume mix.

Rob Dillard: Between 2019 and the end of 2023, industrial price cost increased 184 million, and year today in 2024, industrial price cost has decreased 102 million. We believe that we are now close to a balanced price cost position, and that future trends will be positive based on strategic pricing. We believe that this is evidence that our pricing strategy industrial was working, and we expect price costs will turn positive over the long run. We continue to seek market price increases to offset higher OCC and other inflationary inputs. We anticipate paper benchmarks will accurately reflect the inflationary environment and approving marking conditions in the second half of the year.

Howard Coker: Between 2019 and the end of 2023, industrial price costs increased $184 million.

Rob Dillard: We believe that this is evidence that our pricing strategy for industrial customers is working, and we expect price costs will turn positive over the next few months. We continue to seek market price increases to offset higher OCC and other inflationary inputs. We anticipate paper benchmarks will accurately reflect the inflationary environment and improving marketing conditions in the second half of the year. Industrial EBITDA margin was 16.3%.

Howard Coker: We continue to seek market price increases to offset higher OCC and other inflationary inputs. We anticipate paper benchmarks will accurately reflect the inflationary environment and improving market conditions in the second half of the year.

Rob Dillard: Industrial EBITDA margin was 16.3%. We believe that industrial margins will continue to improve with volume recovery and future pricing action.

Rob Dillard: We believe that industrial margins will continue to improve with volume recovery and future pricing. Page 12 has our results for the all-weather. All other sales were $95 million due to volume mix declines and the sale of the protective solution.

Rob Dillard: Page 12 has our results for the All Other Businesses. All other sales were 95 million due to volume mix declines and the sale of the protective solution business. All other EBITDA was 17 million due to lower volume mix and negative price costs, offsetting 3 million of productivity.

Rob Dillard: All other EBITDA was $17 million due to lower volume mix and negative price costs, offsetting $3 million of product cost. Moving to page 13. Our capital allocation framework aligns with our business strategy to drive value creation through earnings growth and margin. The four pillars of our capital allocation model are capital investment to drive growth and improve profitability. Dividend Increases to Reward Shareholders. Programmatic M&A to Action a Portfolio Strategy, share of purchases to return capital and maximize shareholder value.

Howard Coker: All other EBITDA was $17 million due to lower volume mix and negative price cost, offsetting $3 million of productivity.

Rob Dillard: Moving to page 13. Our capital allocation framework aligns with our business strategy to drive value creation through earnings growth and margin improvement. The four pillars of our capital allocation model are capital investment to drive growth and improve profitability, dividend increases to reward shareholders, programmatic M&A to action a portfolio strategy, and share purchases to return capital and maximize shareholder value. Our goal is to be the most disciplined employer of capital in our industry and to drive the highest ROW at and strong cash conversion while also returning capital to shareholders. To achieve this goal, we remain focused on our dynamic capital allocation strategy.

Howard Coker: Our capital allocation framework aligns with our business strategy to drive value creation through earnings growth and margin improvement.

Howard Coker: The four pillars of our capital allocation model are capital investment to drive growth and improve profitability, dividend increases to reward shareholders,

Howard Coker: Programmatic M&A to Action a Portfolio Strategy, and Share of Purchases to Return Capital and Maximize Shareholder Value.

Rob Dillard: Our goal is to be the most disciplined deployer of capital in our industry, to drive the highest ROIC and strong cash conversion while also returning capital to shareholders. To achieve this goal, we remain focused on our dynamic capital allocations.

Rob Dillard: We believe that this strategy is working and that the productivity results we are now generating and the growth that we are anticipating are indications of this success. As Howard mentioned, our long-range planning and capital allocation process continues to yield great results. We have a meaningful amount of highly strategic, high return capital opportunities, primarily in our RPC and metal packaging businesses. As we evaluate these opportunities, we will continue to tighten our focus on fewer, bigger businesses. As a result, we are planning to expand our divestiture program, and we believe that we have the potential to yield more proceeds than from divestitures in the next 12 to 18 months than the previously expected one billion.

Rob Dillard: We believe that this strategy is working, and that the productivity results we are now generating and the growth that we are anticipating are indications of this success. As Howard mentioned, our long-range planning and capital allocation process continues to yield great results. We have a meaningful amount of highly strategic, high-return capital opportunities, primarily in our RPC and metal packaging businesses, as we evaluate these opportunities. We will continue to tighten our focus on fewer, bigger businesses.

Howard Coker: We believe that this strategy is working and that the productivity results we are now generating and the growth that we are anticipating are indications of this success.

Howard Coker: As we evaluate these opportunities, we will continue to tighten our focus on fewer, bigger businesses.

Rob Dillard: As a result, we are planning to expand our divestiture program, and we believe that we have the potential to yield more proceeds from divestitures in the next 12 to 18 months than the previously expected $1 billion. As previously communicated, we believe that we have a strong base plan to finance the Eviosis acquisition, which we anticipate we'll close in the fourth quarter.

Howard Coker: As a result, we are planning to expand our divestiture program, and we believe that we have the potential to yield more proceeds from divestitures in the next 12 to 18 months than the previously expected $1 billion.

Rob Dillard: As previously communicated, we believe that we have a strong base plan to finance the EVS acquisition, which we anticipate will close in the fourth quarter. We believe that expanding our divestiture program as a potential to further accelerate our portfolio simplification strategy, improve our performance average, and increase shareholder value. As always, we are being disciplined in our strategic activity, and we expect to provide further updates as our plans progress.

Howard Coker: As previously communicated, we believe that we have a strong base plan to finance the EVSS acquisition.

Rob Dillard: We believe that expanding our divestiture program has the potential to further accelerate our portfolio simplification strategy, improve our proforma leverage, and increase shareholder value. As always, we are being disciplined in our strategic activity, and we expect to provide further updates as our plans progress. On page 14, we have our cash flow performance. In the second quarter, we generated operating costs of $109,000, and capital expenditures were $93 million for the quarter.

Howard Coker: which we anticipate will close in the fourth quarter.

Howard Coker: We believe that expanding our divestiture program has the potential to further accelerate our portfolio simplification strategy.

Howard Coker: Improve our pro forma leverage, and increase shareholder value. As always, we are being disciplined in our strategic activity, and we expect to provide further updates as our plans progress.

Rob Dillard: On page 14, we have our cashflow performance for the quarter. In the second quarter, we generated operating cashflow of 109 million. Capital expenditures was 93 million for the quarter. We're on track with all major initiatives and anticipate investing between 350 and 375 million in 2024. Over the past few years, we've updated our capital allocation process to focus on strategic, high return, value-adding projects. As we improve this process, we are allocating an increasing amount of capital to value-adding projects versus value-maintaining projects.

Howard Coker: On page 14, we have our cash flow performance for the quarter.

Howard Coker: In the second quarter, we generated operating cost flow of $109 million.

Rob Dillard: We're on track with all major initiatives and anticipate investing between $350 and $375 million in 2024. Over the past few years, we've updated our capital allocation process to focus on strategic high-return value adding projects. As we improve this process, we are allocating an increasing amount of capital to value adding projects versus value maintaining projects. We anticipate that this capital efficiency will enable us to maintain this level of capital investment even as we increase our scale, turning the page.

Howard Coker: Capital Expenditures was $93M for the quarter. We're on track with all major initiatives and anticipate investing between $350M and $375M in 2024.

Howard Coker: Over the past few years, we've updated our capital allocation process to focus on strategic high-return, value-adding projects.

Howard Coker: As we improve this process, we are allocating an increasing amount of capital to value-adding projects versus value-maintaining projects.

Rob Dillard: We anticipate that this capital efficiency will enable us to maintain this level of capital investment even as we increase our scale, turning to page 15. The foundation of our value creation strategy is disciplined management of our investment-grade balance sheet. This strategy provides to not go incredible access to capital, strong liquidity, and low cost. In the second quarter, we have had over 1.4 billion of liquidity, a weighted average maturity of 6.8 years and a weighted average cost of that of 3.9%. We repaid 75 million of debt in the quarter and reduced net debt to adjust the EBITDA to 2.8 times.

Howard Coker: We anticipate that this capital efficiency will enable us to maintain this level of capital investment even as we increase our scale. Turning to page 15.

Rob Dillard: The foundation of our value creation strategy is disciplined management of our investment grade. This strategy provides Sonoco incredible access to capital. (inaudible) We repaid $75 million of debt in the quarter and reduced net debt to adjusted EBITDA to 2.8 times.

Howard Coker: The foundation of our value creation strategy is discipline management of our investment-grade balance sheet.

Howard Coker: This strategy provides Sonoco incredible access to capital, strong liquidity, and low cost. In the second quarter, we had over $1.4 billion of liquidity, a weighted average maturity of 6.8 years, and a weighted average cost of debt of 3.9%.

Howard Coker: We repaid $75 million of debt in the quarter and reduced net debt to adjusted EBITDA to 2.8 times.

Rob Dillard: On page 16, how's our guidance for Q3 2024? Guidance for Q3 2024 adjusted EPS is $1.30 to $1.60. We expect consumer volumes to remain on trend in Q3 and expect a year of year volumes to increase due to acquisitions and improvements and metal packaging. We expect industrial volumes to improve in Q3 as we are experiencing improved order rates and backlogs, especially in the North America paper markets. However, we are not yet anticipating robust recovery. Industrial price trends are expected to improve, and price costs is expected to improve sequentially. OTC is expected to remain flat in the quarter, and tan bending chip index is expected to reflect market increases later in the second half of 2024.

Rob Dillard: On page 16, we have our guidance for Q3 2021. Guidance for Q3 2024 Adjusted EPS is $1.40 to $1.60. We expect consumer volumes to remain on trend in Q3 and expect year-over-year volumes to increase due to acquisitions and improvements in metal packaging. We expect industrial volumes to improve in Q3 as we are experiencing improved order rates and backlogs, especially in the North America paper market. However, we are not yet anticipating a robust recovery, industrial price trends are expected to improve, and price costs are expected to improve, OTC is expected to remain flat in the quarter, and the TAN Vending Chip Index is expected to reflect market increases later in the second half of 2024.

Howard Coker: On page 16 has our guidance for Q3 2024.

Howard Coker: Guidance for Q3 2024 adjusted EPS is $1.40 to $1.60. We expect consumer volumes to remain on trend in Q3 and expect year-over-year volumes to increase due to acquisitions and improvements in metal packaging.

Howard Coker: We expect industrial volumes to improve in Q3, as we are experiencing improved order rates and backlogs, especially in the North America paper markets. However, we are not yet anticipating robust recovery.

Howard Coker: Industrial price trends are expected to improve, and price costs are expected to improve sequentially.

Howard Coker: OCC is expected to remain flat in the quarter, and TAN Vending Chip Index is expected to reflect market increases later in the second half of 2024.

Rob Dillard: We are reaffirming our guidance for full year 2024 adjusted EPS to $5 to $5.30. Similarly, we are reaffirming our full year 2024 adjusted EBITDA guidance to 1.5 billion to 1.9 billion and our operating cash load guidance of 650 million to 750 million.

Rob Dillard: We are reaffirming our guidance for full year 2024 adjusted EPS of $5 to $5.30. Similarly, we are reaffirming our full year 2024 adjusted EBITDA guidance of $1.05B to $1.09B and our operating cash flow guidance of $650M to $700M. Now Rodger will further discuss the outlook. Thanks, Rob.

Howard Coker: We are reaffirming our guidance for full year 2024 adjusted EPS to $5 to $5.30.

Howard Coker: Similarly, we are reaffirming our full-year 2024 adjusted EBITDA guidance to $1.05 billion to $1.09 billion and our operating cash flow guidance of $650 million to $750 million.

Roger Fuller: Now, Roger, we'll further discuss the outlook for the business. Thanks, Rob. Please turn to page 17 for a view of segment performance drivers for the third quarter of 2024. In the consumer segment, we expect sales to be up both sequentially and year-over-year. Our metal-packeting business is performing well. Sales are expected to be up sequentially and year-over-year.

Rodger Fuller: Please turn to page 17 for a view of segment performance drivers for the third quarter of 2024. For the consumer segment, we expect sales to be up both sequentially and year over year. Our metal packaging business is performing well, and sales are expected to be up sequentially and year-over-year. Bukin cells are solid as we're entering the packing season for fresh vegetables, and aerosol cells are strong as demand for household products is improving after de-stocking during the same period last year.

Howard Coker: Now, Rodger will further discuss the outlook for the business.

Rodger: Thanks, Rob. Please turn to page 17 for a view of segment performance drivers for the third quarter of 2024.

Rodger: In the consumer segment, we expect sales to be up both sequentially and year over year.

Rodger: Our metal packaging business is performing well. Sales are expected to be up sequentially and year-over-year. Bouquin sales are solid as we're entering the pack season for fresh vegetables, and aerosol sales are strong as the demand for household products is improving after de-stocking the same period in the last year.

Roger Fuller: Who can sell our solid as we're entering the pack season for fresh vegetables? And aerosol sales are strong as the demand for household products is improving after these stockings in the same period in the last year. We continue to monitor sales supply based on domestic constraints and tariff uncertainties, but our team is doing a great job to support our customers through strategic purchasing execution. In rigid paper containers, we see sales up marginally year-over-year, with some sequential improvement in North America from snacks and other discretionary food products. We believe lingering high shelf prices continue to mute consumer purchases, and we're looking to the future for promotions to stimulate higher volumes.

Rodger Fuller: We continue to monitor sales supply based on domestic constraints and tariff uncertainties. Our team is doing a great job to support our customers through strategic purchasing. In rigid paper containers, we see sales up marginally year over year, with some sequential improvement in North America from snacks and other discretionary food products. We believe lingering high shelf prices continue to mute consumer purchases.

Howard Coker: We continue to monitor sales supply based on domestic constraints and tariff uncertainties. Our team is doing a great job to support our customers through strategic purchasing execution.

Howard Coker: In rigid paper containers, we see sales up marginally year over year with some sequential improvement in North America from snacks and other discretionary food products.

Rodger Fuller: And we're looking to the future for promotions to stimulate higher volume. As Howard mentioned earlier, we continue to invest and innovate to meet the sustainable packaging goals of our customers, and we have a multi-year funnel of great opportunities. Support future RIDGID paper can growth. And for our Thermoform Flexible Packing business, we anticipate sales to be flat sequentially but up year over year. Flexible's organic volume is solid, and total volume is aided by the NFL acquisition in Brazil, which continues to perform above our expectations.

Howard Coker: We believe lingering high shelf prices continue to mute consumer purchases.

Roger Fuller: As Howard mentioned earlier, we continue to invest and innovate to meet sustainable packing goals of our customers and have a multi-year funnel of great opportunities to support future rigid paper can grow. And our thermoform flexible packing business, we anticipate sales to be flat sequentially but up year-over-year. Flexible organic volume is solid, and total volume is aided by the NFL acquisition in Brazil, which continues to perform above our expectations. We remain in the early stages of our integration of flexible and thermoforming businesses, and we continue to see upside opportunities and synergies for combining these businesses well into the future.

Howard Coker: And we're looking to the future for promotions to stimulate higher volumes.

Howard Coker: As Howard mentioned earlier, we continue to invest and innovate to meet the sustainable packaging goals of our customers.

Howard Coker: and have a multi-year funnel of great opportunities to support future rigid paper can growth.

Speaker Change: And our Thermoform flexible packaging business, we anticipate sales to be flat sequentially, but up year over year. Flexible's organic volume is solid, and total volume is aided by the NFL acquisition in Brazil, which continues to perform above our expectations.

Rodger Fuller: We remain in the early stages of our integration of flexibles and thermoforming businesses, and we see and continue to see upside opportunities and synergies for combining these businesses well into the future. So, in total, for the consumer segment versus the same quarter last year, we anticipate that organic volumes will be up mid-single digit.

Howard Coker: We remain in the early stages of our integration of flexibles and thermoforming businesses.

Speaker Change: And we continue to see upside opportunities and synergies for combining these businesses well into the future.

Roger Fuller: So, in total for the consumer segment versus the same quarter last year, we anticipate that organic volumes will be up mid-single digits, price costs will be slightly negative year-over-year, and we expect continued positive productivity across each of our consumer businesses. An industrial expect sales will be flat sequentially from last year and up year-over-year from organic volume growth and acquisition. And our North American paper business volumes to support additional and tall consumer end markets remain solid. The capacity utilization of our North American paper operations will remain strong in the third quarter at well over 90%. The same is true for our North American converting businesses, where volumes are up year-over-year from increased demand in our Cuban core business for the film industry, which is driven by both consumer and industrial end markets.

Speaker Change: So, in total for the consumer segment versus same quarter last year.

Rodger Fuller: Price and cost will be slightly negative year over year, and we expect continued positive productivity across each of our consumers. In industrial, we expect sales to be flat sequentially from last year and up year over year from organic volume growth and activity. Our North American paper business volumes and support for tissue and tile consumer end markets remain solid. Capacity utilization of our North American paper operations will remain strong in the third quarter at well over 90%.

Howard Coker: We anticipate that organic volumes will be up mid-single digits.

Howard Coker: Price costs will be slightly negative year-over-year.

Howard Coker: And we expect continued positive productivity across each of our consumer businesses.

Howard Coker: Industrial, we expect sales to be flat sequentially from last year and up year over year from organic volume growth and acquisition.

Howard Coker: In our North American paper business, volumes and support of tissue and tile consumer end markets remain solid.

Howard Coker: The capacity utilization of our North American paper operations will remain strong in the third quarter.

Rodger Fuller: The same is true for our North American converting businesses, where volumes are up year over year from increased demand in our tubes and core business for the film industry, which is driven by both consumer and industrial demand in the market. As Rob said earlier, this is certainly not a robust recovery, but volume levels have increased over the depressed levels that we saw last year. The price cost is impacting industrial profit profitability to a lesser degree than the first half of 2020.

Howard Coker: at well over 90 percent.

Howard Coker: The same is true for our North American converting businesses, where volumes are up year over year from increased demand in our tubes and core business for the film industry.

Roger Fuller: As Rob said earlier, this is certainly not a robust recovery, but volume levels have increased over the press levels that we saw last year. Price cost is impacting industrial profitability to a lesser degree than the first half of 2024. The remains of drag year-over-year as higher input costs for raw materials and labor have not yet fully recovered in our announced pricing increases. But we do expect that the contracted price resets will reflect improved pricing in the second half of the year.

Howard Coker: which is driven by both consumer and industrial end markets.

Howard Coker: As Rob said earlier, this is certainly not a robust recovery.

Rob: The volume levels have increased over the press levels that we saw last year.

Rob: Price-cost is impacting industrial profitability to a lesser degree than the first half of 2020.

Rodger Fuller: However, it remains a drag year over year as higher input costs for raw materials and labor have not yet fully been recovered in our announced pricing. We do expect that the contracted price resets will reflect improved pricing in the second half of the year. Similar to consumer, we expect industrial productivity to be positive across all industrial businesses in the third quarter, and we expect total industrial volumes to be low single digits year over year.

Speaker Change: Thank you. Thank you.

Speaker Change: There remains a drag year over year as higher input costs for raw materials and labor have not yet fully been recovered and are announced price increases.

Roger Fuller: of the Year. Similar to the summer, we expect industrial productivity to be positive across all industrial businesses in the third quarter, and we expect total industrial volumes of low single digits year-over-year.

Rob: But we do expect that the contracted price resets will reflect improved pricing in the second half of the year.

Rob: Similar to the consumer, we expect industrial productivity to be positive across all industrial businesses in the third quarter.

Rodger Fuller: All others, and all other sales will be lower on a year-over-year basis after the sale of our protective solutions. However, sales will be up sequentially from seasonally higher volumes from our Temperature Assured Packaging business.

Rob: And we expect total industrial volumes of low single digits year over year.

Roger Fuller: In all other sales will be lower on a year-over-year basis after the sale of our protective solutions business. Sales will be up sequentially from seasonally higher volumes from our temperature, a shared packaging business. We also expect year-over-year margin improvements driven by improved mix and profitability. Our teams continue to do a real fantastic job on the productivity front as shown by our first half 24 results. As Howard mentioned earlier, our clear and focused investments in value-generating capital over the last several years are really paying off. These investments, coupled with effective cost management and a strong focus on continuous improvement across the organization, have also underpinned outstanding productivity performance, and I just want to, as well as Howard and Robert done, thank the entire organization for these results.

Rob: All others and all other sales will be lower on a year year-over-year basis after the sale of our protective solutions business.

Speaker Change: Sales will be up sequentially from seasonally higher volumes from our Temperature Assured Packaging business.

Rodger Fuller: We also expect year-over-year margin improvements driven by improved mix and profit. Our teams continue to do a really fantastic job on the productivity front, as shown by our first half 24 results. As Howard mentioned earlier, our clear and focused investments in value-generating capital over the last several years are really paying off. These investments, coupled with effective cost management and a strong focus on continuous improvement across the organization, have also underpinned outstanding productivity performance. And I just wanna, as well as Howard and Rob did, thank the entire organization for these results. Great. Thanks, Rodger.

Rob: We also expect year-over-year margin improvements driven by improved mix and profitability.

Speaker Change: Our teams continue to do a real fantastic job on the productivity front as shown by our first half 24 results.

Rob: As Howard mentioned earlier, our clear and focused investments in value-generating capital over the last several years are really paying off.

Howard Coker: These investments, coupled with effective cost management and a strong focus on continuous improvement across the organization,

Speaker Change: have also underpinned outstanding productivity performance. And I just want to, as well as Howard and Rob have done, thank the entire organization.

Howard Coker: So, with that, Howard, back to you. Great. Thanks, Roger.

Howard Coker: In closing on page 18, I just want to take a moment to remind everyone of the plans we laid out to deliver long-term shareholder value. At Investor Day earlier this year, we provided our outlook over the next five years for targeting adjusted EBITDA of $1.5 billion. [inaudible] We're expecting to generate cumulative operating cash flow of $4 to $5 billion, all while we remain committed to growing and paying a competitive dividend. We are in full execution mode of our next-era enterprise strategy.

Howard Coker: I'm closing on page 18. I just want to take a moment to remind everyone of the plans we laid out to deliver long-term shareholder value. At our investor day over this year, we provided our outlook of the next five years for targeting adjusted EBITDA of $1.5 billion with high teams EBITDA margins. And we're expecting to generate cumulative operating cash below a four to five billion dollars, all while we remain committed to growing and paying a competitive dividend. We are in full execution mode of our next-era enterprise strategy, and certainly, with the highly strategic EVO system transaction, we expected to deliver results in excess of these targets.

Speaker Change: for these results.

Howard Coker: So with that, Howard, back to you. Great. Thanks, Rodger. In closing on page 18, I just want to take a moment to remind everyone of the plans we laid out to deliver long-term shareholder value.

Howard Coker: At Investor Day earlier this year, we provided our outlook over the next five years for targeting adjusted EBITDA of $1.5 billion with high-paying EBITDA margins.

Speaker Change: We're expecting to generate cumulative operating cash flow of $4 to $5 billion.

Howard Coker: And certainly, with the highly strategic EBIOSIS transaction, we expect to deliver results in excess of these targets. We're building a stronger portfolio that delivers greater value. Simplifying the Cup, unifying our global operating model., Robert Coker, Robert Dillard, John Haley, John Haley, Robert Dillard, Sonoco, and that operator would be happy to take any calls or questions.

Speaker Change: All while we remain committed to growing and paying a competitive dividend.

Rob: We are in full execution mode of our next era enterprise strategy and certainly at the highly strategic EBIOSIS transaction, we expect to deliver results in excess of these targets.

Howard Coker: We're building a stronger portfolio to deliver greater value, simplifying the company, and unifying our global operating model to improve financial results while maintaining our disciplined capital structure.

Howard Coker: We're building a stronger portfolio that delivers greater value.

Howard Coker: Simplifying the company.

Howard Coker: and Unifying Our Global Operating Model to Improve Financial Results while Maintaining Our Disciplined Capital Structure. So I'm really looking forward for you to see what's next.

Howard Coker: So I'm really looking forward for you to see what's next for Sonoco, and the fan operator would be happy to take any calls or questions.

Operator: Certainly, as a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. One moment for our first question.

Speaker Change: for Sonoco, and with that, operator, we'll be happy to take any calls.

Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: for questions.

Speaker Change: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A. One moment for our first question, and our first question will come from Matt Roberts of Raymond James. Matt, your line is open. Hey, good morning, everybody.

Matt Roberts: And our first question will come from Matt Roberts of Raymond James. Matt, your line is open.

Speaker Change: One moment for our first question.

Speaker Change: And our first question will come from Matt Roberts of Raymond James. Matt, your line is open.

Matt Roberts: Hey, good morning everybody, and thank you for the time. Rob, on the incremental divestitures you mentioned, I wonder if you could provide any additional color on other product lines or segments that you've expanded that program to and any type of EBITDA contribution you're considering. I'm just trying to get a sense of the magnitude of what you're looking at and what the business will look like on the other side.

Matt Roberts: And thank you for your time. Rob, on the incremental divestitures you mentioned, I was wondering if you could provide any additional color on either product lines or segments that you've expanded that program to? type of contribution you're considering. I'm just trying to get a sense of the magnitude of what you're looking at and what the business will look like on the other side. Please stand by; back in February, and you're on the phone, you may re-enter. Operator, are you there? I'm here on the line with you.

Matt Roberts: Hey, good morning, everybody. And thank you for the time.

Matt Roberts: Rob, on the incremental divestitures you mentioned, I was wondering if you could provide any additional color on other product lines or segments that you've expanded that program to, and any type of contribution you're considering, just trying to get a sense of the magnitude of what you're looking at and what the business will look like on the other side.

Operator: Please stand by. I'm back in February. And you're on the picture; you may re-answer.

Speaker Change: Please stand by.

Matt Roberts: Please stand by.

Operator: Operator, are you there? I'm here on the line with you. You may re-answer your questions.

Operator: You may re-answer your question. I'm not sure where we are in terms of the Q&A process. Matt, is your question still pending? I will move Matt Roberts back to the stage.

Speaker Change: And you are on the phone. You may re-answer.

Speaker Change: Operator, are you there?

Operator: I'm not sure where we are in terms of the Q&A process. Matt, is your question still pending? I will move Matt Roberts back to the stage. Hey, Howard, are you with me? And Matt Roberts' line is open. He is on the stage. Sorry about that. Yes, I was still on the first question.

Speaker Change: I'm here on the line with you. You may re-answer your question.

Speaker Change: I'm not sure where we are in terms of the Q&A process, so.

Howard Coker: Hey, Howard, are you with me? And Matt Roberts' line is open. He is on the stage.

Speaker Change: Hey Howard, are you with me?

Matt Roberts: Hey, sorry about that. Um, yeah, so still still on the first question, really. Operator, I'm not sure what's happening here, Matt, or if the audio wasn't working. I think you need to re-enter. The speaker line is promoted to the stage. However, when I promote Matt to the stage, it removes the speaker line.

Speaker Change: And Matt Roberts' line is open. He is on the stage.

Speaker Change: Hey Howard, sorry about that. Yeah, so still on the first question really just...

Operator: Operator, I'm not sure what's happening here. Matt or audio wasn't working. I think you need that reaction.

Speaker Change: Operator, I'm not sure what's happening here. Matt, our audio wasn't working, so I think you need to re-answer this.

Operator: The speaker line is promoted to the stage. However, when I promote Matt to the stage, it removes the speaker line. And I'm not exactly sure how to resolve that.

Operator: And I'm not exactly sure how to resolve that. The map. I can promote George Staphos. One moment. Let's try George and see if we can't get a call rolling. I'm bringing George to the stage now. Everyone, can you hear me okay?

Operator: The math. I can promote your staffos one moment.

George Staphos: Let's try George and see if we can get the call rolling. I'm bringing George to the stage now. Everyone, can you hear me okay? Injured Just Line has been promoted. It's always nice to be promoted. Can you guys hear me okay?

Speaker Change: I can promote George Staphos.

Speaker Change: Let's try George and see if we can't get the call rolling. I'm bringing George to the stage now.

George Staphos: and Georgia's Line has been promoted. It's always nice to be promoted. Can you guys hear me?

George Staphos: Hello everyone. Can you hear me okay? And Georgia's Line has been promoted.

George Staphos: Always nice to be promoted. Can you guys hear me okay?

Operator: Operator, I'm not hearing anybody on the One moment. I can ask a question. Please ask your question, and I'll promote them back to the stage. Thank you. I think I was going to ask the same question as Matt, which is, can you talk about what else you are adding, perhaps, to the divestiture queue? And, you know, Rob.

Operator: Operator, I'm not hearing anybody on this. One moment.

George Staphos: I can ask a question, but I'm not sure they'll hear it. Please ask your question, and I'll promote them back to the stage. Okay, thank you. I think I was going to ask the same question as Matt, which is, can you talk to what else you are adding perhaps to the investiture queue? And Rob, maybe a specific question on ROWIC. You talk about ultimately want to be the most disciplined capital allocator and have the highest ROIC in the industry. What is the starting point for ROWIC in your view? Where are you relative to peers and what's the goal in three years?

Speaker Change: Operator, I'm not hearing anybody on the other end of the line. One moment. I can ask a question, but I'm not sure they'll hear it.

Speaker Change: Please ask your question and I'll promote them back to the stage.

Speaker Change: Okay, thank you. I think I was gonna ask the same question as Matt, which is, can you talk to what else you are adding perhaps to the divestiture queue? And...

Howard Coker: Question on Roe, of the highest ROI. What is the starting point for ROA? Where are you relative to peers, and what's the goal in three years? I use this point in time to talk about specific businesses that we're targeting. You know, our thought processes have evolved as we look at the materiality of this, the current transaction acquisition, and really allows us, affords us the opportunity to take a look at two things. One is to pull forward on the strategies. The simplification strategy where we have yet to define to you guys exactly what we're looking at. I know you're trying to get to that.

Speaker Change: You know, Rob, maybe a specific question on ROIC.

Speaker Change: You talk about ultimately wanting to be the most disciplined capital allocator and have the highest ROIC in the industry.

Rob: What is the starting point for ROIC in your view?

Rob Dillard: So the Investiture is in ROWIC, kind of my two questions. Opposition at this point in time to talk about specific businesses that we're targeting. You know, our thought processes have evolved as we look at the materiality of the current transaction acquisition, and really allows us forward just the opportunity to take a look at two things. One is to pull forward on the strategies. That simplification strategy where we have yet to define to you guys exactly what we're looking at. I know you're trying to get to that.

Speaker Change: Where are you relative to peers? And what's the goal in three years? So divestitures and ROA are kind of my two questions.

Speaker Change: I position this point in time to talk about specific businesses that we're targeting. You know, our thought processes have evolved as we look at the materiality of

George Staphos: of the current transaction acquisition.

George Staphos: and really allows us, affords us the opportunity to take a look at two things. One is to pull forward on the strategies.

George Staphos: That simplification strategy where we have yet to define to you guys exactly what we're looking at. I know you're trying to get to that.

Howard Coker: But we will be bringing it to you in the very near future, but it allows us to do a couple of things. One is move forward the simplification strategy and improve the capital structure of the company on a more rapid basis than we otherwise would have thought. So more to come on that side, and I will pass it on to Rob on the roll-out question. Yeah, thanks, George, and hopefully, I've been promoted too.

Rob Dillard: But we will be bringing it to you in the very near future. But it allows us to do a couple of things. One is move forward the simplification strategy and improve the capital structure of the company on a more rapid basis.

George Staphos: But we will be bringing it to you in the very near future. But it allows us to do a couple of things. One is move forward the simplification strategy and improve the capital structure of the company.

Rob Dillard: And otherwise we had thought so, more to come on that side, and I will pass it on to ROWIC. Yeah, yeah, thanks George, and hopefully I've been promoted to from a relic perspective. You know, we're really excited about this capital allocation program and the initial results that we're getting. It's given us a lot of conviction to really move forward with the strategy from a portfolio perspective. And as we think about that, that's going to give us a lot of opportunity to further expand the relic on two fronts: one from doing really smart capital investments and deploying our operating model.

Rob: On a more rapid basis than otherwise we had thought. So, more to come on that side, and I will pass it on to Rob on the roll-out question. Yeah, yeah, thanks, George, and hopefully I've been promoted too.

Rob Dillard: From a relic perspective, you know, we're really excited about this capital allocation program and the initial results that we're getting. It's given us a lot of conviction to really move forward with the strategy from a portfolio perspective. And as we think about that, that's going to give us a lot of opportunity to further expand the relic on two fronts. One, from making really smart capital investments and deploying our operating model, and then also managing the portfolio in a really active way.

Rob: and the initial results that we're getting. It's given us a lot of conviction to really move forward with the strategy from a portfolio perspective.

Rob: And as we think about that, that's going to give us a lot of opportunity to further expand the ROIC on two fronts. One, from doing really smart capital investments and deploying our operating model, and then also managing the portfolio in a really active way.

Rob Dillard: And then also managing the portfolio in a really active way. Where we're starting now is we're above 11%. So we feel like, you know, that's a strong ROWIC, but one that we can definitely improve. We don't have a specific goal, but I would tell you that the focus businesses in our portfolio have over 20% ROWIC. And so we're investing with expectations that the ROWICs of our investments exceed that. And we feel really good that we'll be able to meet those expectations.

Rob Dillard: Where we're starting now is we're, you know, above 11%. So we feel like that's a strong relic, but one that we can definitely improve. We don't have a specific goal, but I would tell you that the focus businesses in our portfolio have over 20% relics. And so we're investing with expectations that the relics of our investments will exceed that. And we feel really good that we'll be able to meet those expectations. And please take a moment for our next question, which comes from Ghansham Panjabi. One moment.

George Staphos: So, we feel like, you know, that's a strong ROIC, but one that we can definitely improve. We don't have a specific goal, but I would tell you that the focus businesses in our portfolio have over 20% ROICs.

Operator: In one moment, for our next question, which comes from Ganshan Punjabi. One moment. Thank you.

Ghansham Panjabi: Thank you. I'll just ask one question. Unknown Speaker, Unknown Speaker. On the consumer business, maybe you can give us a bit more color on the step function and productivity that you generated in 2Q, which I think was $25 million for the segment versus $15 million in 1Q. What drove that differential?

Gregory Andreopoulos: I'll just ask one question, just to eliminate future issues. On the consumer business, you know, maybe you can give us a bit more color on the step function and productivity that you generated in 2Q, which I think was 25 million for the segment versus 15 in 1Q. What drove that differential? Because that was obviously the biggest component of your margin increase. And then second, you know, in terms of the outlook for consumer, I think you said mid-single of the growth in the back half of the year. Is that just a function of purely easier comparisons?

George Staphos: One moment.

Speaker Change: On the consumer business, you know, maybe you can give us a bit more color on the step function and productivity that you generated in 2Q, which I think was $25 million for the segment versus 15 in 1Q. What drove that differential because that was obviously the biggest?

Rodger Fuller: Because that was obviously the... [inaudible] You know, in terms of the outlook for consumers, I think you said mid single-digit growth in the back half of the year. Is that just a function of purely easier comparisons, you know, the lapping of inventory, de-stock, or just a directional increase in promotional activity? What's behind those numbers? And I'll turn it over after that.

Gregory Andreopoulos: You know, the lapping of inventory destocking or just the directional increase in promotion, like could you? What's behind those numbers?

Rodger Fuller: And I'll turn it over after that. Thanks. That's where we focused the tremendous amount of our capital productivity. Capital focused on generating incremental capacity out of our best lines. Automation is a huge effort for our consumer businesses, and we've got a backlog of automation projects for the company expanding until the end of 2025. And then a real focus on cost control and getting our footprint right with a number of footprint consolidations. Yeah, that was, you know, improving volume. As we said back in February, if you remember back in February, we played out $300,000,000 of productivity over the planning period, which averaged about $100,000,000 a year.

Rodger Fuller: That's where we focused a tremendous amount of our capital, productivity capital, on generating incremental capacity out of our best lines. Automation is a huge effort for our consumer businesses, and we've got a backlog of automation projects for the company expanding until the end of 2025, and then a real focus on cost control and getting our footprint right with a number of footprint consolidations. You add that with, you know, improving volume, as we said back in February. If you remember, back in February, we played out 300 $500 million of productivity over the planning period, which averages about $100 million a year. Obviously, we're ahead of that pace.

Speaker Change: That's where we focused a tremendous amount of our capital, productivity capital, focused on generating incremental capacity out of our best lines.

Speaker Change: for the company, expanding until the end of 2025. And then a real focus on cost control and getting our footprint right with a number of footprint consolidations.

Speaker Change: You add that with, you know, improving volume, as we said back in February , if you remember back in February , we laid out $300, $500 million.

Rodger Fuller: Obviously, we were ahead of that pace. We said at that time, improving volume would help us increase and continue to drive to the high end of that $300,000,000 to $500,000,000,000. So I'd say it's across the company, not just consumer, but yeah, very strong. It was manufacturing productivity driven by the plants on a day-to-day basis. On second half consumer, you're right. Some of that is versus, you know, an easier, I guess, comparison was third quarter last year being our most difficult quarter from a consumer volume standpoint. But, as I said in my prepared comments, we're seeing the effects of any kind of inventory bill through coming out of COVID, especially in our metal can business, go away.

Rodger Fuller: We said at that time that improving volume would help us increase and continue to drive to the high end of that 300 to 500 million level. So I'd say it's across the company, not just consumer. But yeah, very strong.

Rodger Fuller: It was manufacturing productivity driven by the plan, on a day-to-day basis. On second half consumer, you're right, some of that is versus, you know, an easier, I guess, comparison with the third quarter last year being our most difficult quarter from a consumer volume standpoint. But as I said in my prepared comment, We're seeing the effects of any kind of inventory bill through coming out of COVID, especially in our metal can business, go away. All our teams are leading in service and quality, and we continue to gain some share in that area. So, yes, it's a combination.

Speaker Change: on a day-to-day basis.

Rodger Fuller: We've not yet seen, you know, a big impact of promotions. But we're expecting, based on what we hear from our large consumer customers, more promotions coming as we get into the second half. And our next question should come from Mark Weintraub of Seaport Research Partners. Your line is open. Thank you. Operator, we've lost Mark, or at least we're not taking chances. So I'm hoping you can hear me now.

Rodger Fuller: All our teams are leading in service and quality, and we continue to gain some share in that area. So yes, it's a combination. We've not yet seen, you know, a big impact of promotions, but we're expecting that based on what we hear from our large consumer customers to see more promotions coming as we get into the second half of the year. Thank you.

Speaker Change: and we continue to gain some share in that area. So yes, it's a combination. We've not yet seen a big impact of promotions, but we're expecting that based on what we hear from our large consumer customers.

Mark Wyntrop: And our next question should come from Mark Wyntrop of Seaport Research Partners. Your line is open. Thank you.

Mark Wyntrop: Operator, we've lost Mark, or at least we're not picking. So I'm hoping you can hear me now.

Mark Weintraub: So just following up on the expanded divestiture program, does that potentially have implications for the plan to issue up to $500 million of equity? And then second, on rigid paper containers. I know you've been very optimistic about the business, you know, six months, 12 months ago, and certain, I thought there were certain opportunities you thought were going to be coming through this year. Are those just delayed?

Mark Wyntrop: So just following up on the expanded divestiture program, does that potentially have implications for the plan to issue up to $500 million of equity? and then second on rigid paper containers. I know you've been very optimistic on the business about six months, 12 months ago, and I thought there were certain opportunities you thought were going to be coming through this year. Are those just delayed? I know you mentioned the high shelf prices, but maybe a bit more color on what's going on in that business.

Speaker Change: So I'm hoping you can hear me now. So just following up on the expanded divestiture program, does that potentially have implications for the plan to issue up to 500 million dollars of equity?

Speaker Change: and then second...

Howard Coker: I know you mentioned the high shelf prices, but maybe a bit more color on what's going on in that business. Thank you. But we could, with the appropriate valuation in terms of divestiture, draw that down. So, you know, I'll leave that where that is and on our paper container business, really, it's, you know, almost a discrete issue, with with a couple of larger customers still dealing with the the pricing dynamics in the marketplace and getting that right so we view that as a short-term type of phenomenon you know really when we're talking about RPC and the amount of capital we have been putting towards that business next year following a multi-year journey in terms of new facilities that are starting up in Latin America and Asia, a new capacity we're adding around the world.

Howard Coker: Thank you. We could, with the appropriate valuation in terms of the investor, draw that down, so I'll leave that where that is, and on our rigid paper container business, really it's almost a great issue, with a couple of larger customers still dealing with the pricing dynamics in the marketplace and getting that right. So we've either, there's a short term type of phenomenon. You know, really when we're talking about RPC and the amount of capital we have been putting towards that business, that's next year following multi-year journey in terms of new facilities that are starting up in Latin America and Asia and new capacity, we're adding around the world. Just like any couple of investments, it'll take time for those just truly start showing up in a material fashion, but the current situation is more discrete than that.

Speaker Change: Next year, following a multi-year journey in terms of new facilities that are starting up in Latin America and Asia, a new capacity we're adding around the world, just like any capital investments, it'll take time for those just...

Howard Coker: Just like any capital investments, it'll take time for those to truly start showing up in a material fashion, but the current situation is a little bit more, Yeah, Mark. This is Rodger. Rodger, I'll just add, if you look at the third quarter, there is actually strong growth in the rigid paper can business outside of North America. Just to build on what Howard said, you know, the North, it's really a North American issue, the discrete issue that Howard talked about.

Rodger Fuller: Mark, just draw, just add. If you look at the third quarter, I mean, if there is actually strong growth in the rigid paper can business outside of North America, just to build on how it's said, you know, this is really a North American issue, the discrete issue that Howard talked about. So the investments we're making, driving sustainable packaging across Europe and paper, investing in, you know, stack chip capacity outside of North America is performing exactly as expected. So really, it's just waiting for that North American volume to get back to some more normal levels.

Speaker Change: Yeah, Mark, Rodger, I'll just add, if you look at the third quarter, I mean, there is actually strong growth in the rigid paper can business outside of North America, just to build on what Howard said.

Howard Coker: So the investments we're making driving sustainable packaging across Europe and paper, investing in, you know, stack chip capacity outside of North America are performing exactly as expected. So really, it's just waiting for that North American volume to get back to a more normal level.

Gregory Andreopoulos: One moment for our next question. And our next question will come from Gregory, Audra Ballas of City; your line is O.

Rodger Fuller: One moment for our next question. And our next question will come from Gregory Andreopoulos of Citi. Your line is open. Hi, good morning, everyone.

Gregory Andreopoulos: Hi, good morning, everyone. Just a few quick ones for me, so just on consumer, I guess first, you spoke about kind of this modest uptick in discretionary categories in the second quarter. I think snacks were referenced, so I'm wondering if you've seen any other mixed trends that you would consider, you know, notable in consumer that maybe suggests to you that there's some underlying, you know, shifts in consumer trends going on or any other mixed items that you think are worth flagging. And then maybe just one more on productivity year-to-date; you've gotten over 100 million.

Gregory Andreopoulos: Just a few quick ones for me. So just on consumer, I guess, first, you spoke about kind of this modest uptick in discretionary categories in the second quarter. I think snacks were mentioned. So I'm wondering if you've seen any other mixed trends that you would consider, you know, notable and consumer that maybe suggest to you that there's some underlying, you know, shift in consumer trends going on or any other mixed items that you think are worth flagging. And then maybe just one more on productivity. Year to date, you've gotten over 100 million.

Speaker Change: Just a few quick ones for me. So just on consumer, I guess, first, you spoke about kind of this modest uptick in discretionary categories in the second quarter, I think snacks were referenced.

Speaker Change: So I'm wondering if you've seen any other

Speaker Change: Mixed trends that you would consider, you know, notable in consumer that maybe suggest to you that there's some underlying, you know, shift in consumer trends going on or any other mixed items that you think are worth flagging. And then maybe just one more on productivity. Year to date, you've gotten over 100 million.

Rodger Fuller: How do you think about, you know, the cadence of productivity versus the 300 to 500 that you got into the investor day for 24 to 28? And just kind of, as your date productivity came in above or below your expectations, and is that kind of pull forward from the 3 to 500 or is that, you know, incremental, you know, that's all outside to those numbers, and I'll turn it over.

Rodger Fuller: How do you think about, you know, the cadence of productivity versus the 300 to 500 that you guided to the investor day for 24 to 28? And just kind of, has your productivity day come in above or below your expectations? And is that kind of pull forward from the three to 500? Or is that, you know, incremental? Is there an incremental upside to those numbers? I'll turn it over to you. Yeah, that's Roger.

Speaker Change: How do you think about, you know, the cadence of productivity versus the 300 to 500 that you guided to at the investor day for 24 to 28?

Speaker Change: and just kind of, has your day productivity came in above or below your expectations and is that kind of pull forward from the three to five hundred or is that, you know, incremental, you know, is there an incremental upside to those numbers, and I'll turn it over.

Rodger Fuller: Yeah, that's Rodger. You know, on the consumer volume, you know, I think the only the highlight, you know, if you look at cocoa pricing, any chocolate type products from our customer base have been hit by significant inflation. So as we look at promotions and price on shelf, you know, any chocolate type products we're seeing continue to be, you know, in a pretty high range and that's generating obviously some pullback from a consumer. You know, beyond that, you know, other than the, you know, the one item that Howard's already mentioned in North America, you know, we're starting to see some improved man versus St.

Rodger Fuller: You know, on consumer volume, you know, I think the only highlight is that, you know, if you look at cocoa pricing, any chocolate type products from our customer base have been hit by significant inflation. So as we look at promotions and prices on the shelf, you know, any chocolate type products we're seeing continue to be, you know, in a pretty high range, and that's generating, obviously, some pullback from the consumer.

Speaker Change: Yeah, that's Rodger. You know, on the on the consumer volume, you know, I think the only the highlight, you know, if you look at cocoa pricing, any chocolate type products from our customer base have been hit by significant inflation.

Rodger Fuller: You know, beyond that, you know, other than the, you know, the one item that Howard's already mentioned in North America, we're starting to see some improved demand versus the same time last year and quarter record outside of North America. So for me, again, it's really a North American-specific challenge, and hopefully, promotions and some pullback on pricing on the shelf will help. That will help with productivity, you know; I wouldn't really call it a pull forward.

Operator: Tom last year and in quarter of a quarter outside of North America. So for me, again, it's really a North American specific challenge, and hopefully promotions and some pullback on pricing on the shelf will help, um, a couple of help with that productivity. You know, I wouldn't really call it a pull forward. I think again, we said in February, we had a range of 300 to 500 million that we could push towards the top of that range with excellent execution and good volume, and we're starting to see volume improve. Obviously, we can come back and relook that and see if we can improve on that.

Speaker Change: You know, we're seeing starting to see some improved demand versus same time last year and quarter of a quarter outside of North America. So for me, again, it's really a North American specific challenge and hopefully promotions and some pullback on pricing on the shelf will help.

Rodger Fuller: I think, again, we said in February that we had a range of 300 to 500 million that we could push towards the top of that range with excellent execution and good volume, and we're starting to see volume improve. Obviously, we can come back and relook at that and see if we can improve on that.

Speaker Change: We'll help with that.

Rodger Fuller: So it's again, it's an impact from the capital investments we're making and the good work our team is doing. And I think the other significant event this year on the industrial side is the great job our paper team is doing in North America from a capacity utilization standpoint. As you know, we've taken out some high-cost capacity, and put more product into our lowest cost, best running mills. And we've been running in that mid-90 capacity level, you know, for the last few quarters, and that generated some pretty significant productivity for our paper business as well.

Operator: So it's again, it's an impact from the capital investments we're making, the good work our team is doing, and I think the other significant event this year on the industrial side is a great job. Our paper team is doing in North America from a capacity utilization standpoint. As you know, we've taken out some high cost capacity, put more product into our lowest cost best running mills, and we've been running in that mid 90 capacity level, you know, for the last few quarters, and that generated some pretty significant productivity for our paper business as well. So I think for me, those would be the highlights versus what we've already talked about.

Speaker Change: It's again, it's an impact from the capital investments we're making, the good work our team is doing, and I think the other significant event this year.

Speaker Change: On the industrial side is

Speaker Change: And we've been running in that mid-90 capacity level, you know, for the last few quarters, and that generated some pretty significant productivity for our paper business as well. So I think, for me, those would be the highlights versus what we've already talked about.

Operator: And our next.

Matt Roberts: Our next question will come from Matt Roberts of Raymond Jane. Your line is open. Hey, thanks. Hopefully y'all can hear me this time. Um, so I question on the on paper price. So last quarter, when you spoke to this, you guys were constructive on the February increase that was then partially reflected in the index shortly thereafter.

Rodger Fuller: So I think for me, those would be the highlights versus what we've already talked about, Unknown Speaker. Our next question will come from Matt Roberts of Raymond James. Your line is open. Hey, thanks. Hopefully, y'all can hear me this time.

Speaker Change: Our next question will come from Matt Roberts of Raymond James. Your line is open.

Rodger Fuller: So, question on paper prices. So last quarter when you spoke about this, you guys were constructive on the February increase that was then partially reflected in the index shortly thereafter. So maybe you could speak to what you're seeing in the recently announced price, or seeing that reflected in an open market contract. How is power demand and backlogs trending? Compared to the environment last, Price was. And then to that, does the outlook or the guidance anticipate any index pass? M.S. Rodger

Matt Roberts: So a question on the on paper price. So so last quarter when you when you spoke to this

Rodger Fuller: So maybe if you could speak to what you're seeing in the recently announced price increase, are you seeing that reflected in open market contracts and how is how are demand and backlogs trending compared to the environment last quarter when that when the price was reflected in the index and then to that to the outlook or the guidance anticipate any index pass through. Thank you. And master Roger, um, yeah, I'd say it's fairly it's fairly similar. I know we just talked about capacity utilization and the in our North American paper mills. FBA just published the latest results for the second quarter.

Matt Roberts: And how is, how are demand and backlogs trending compared to the environment last quarter when the price was reflected in the index? And to that, does the outlook or the guidance anticipate any index pass-through? Thank you.

Rodger Fuller: Yeah, I'd say it's fair. It's fairly similar. I know I just talked about capacity utilization and North American paper mills, but AFPA just published its latest results for the second quarter. You see, backlogs continue to be pretty solid, you know, pretty flat with where we were at the same time last quarter. As far as open market pricing, we've been very pleased with the contracts that we have that are open market, and both of the increases, we got high yield out of the first and, in the process, are getting high yield out of the second.

Speaker Change: Yeah, I'd say it's fairly similar. I know we just talked about capacity utilization in our North American paper mills.

Rodger Fuller: You see backlogs continue to be pretty solid, you know, pretty flat with where we were. Uh, same time, same time last quarter. Um, as far as open market pricing, we've been very pleased with the contracts that we have that are open market. And both of the increases, we got high yield out of the first and in process getting high yield out of the second. So as Rob said and is prepared remarks, we're expecting some of that to come through from an index pricing and the second half of the year, timing to be determined, of course.

Speaker Change: ntracts that we have that are open market. And both of the increases, we got high yield out of the first and in process getting high yield out of the second.

Rodger Fuller: So, as Rob said in his prepared remarks, we're expecting some of that to come through from index pricing in the second half of the year, timing to be determined, of course, but we expect it to come through. We didn't build it into our guidance.

Rodger Fuller: But we expect it to come through; we didn't build it into our guidance, but it comes through in the next month or two. You know, have an impact really late this year, but more significant impact on 2025. So I'd say at this point, stable, you know, pretty stable where we were in the second quarter, and as far as milieu utilization, pretty stable to where we were in the second quarter. Okay, great. Thank you for the additional color there, Roger.

Rodger Fuller: But if it comes through in the next month or two, you know, it will have an impact really late this year but a more significant impact on 2025. So I'd say at this point, pretty stable where we were in the second quarter. And as far as mill utilization is concerned, pretty stable where we were in the second quarter. Okay, great. Thank you.

Speaker Change: But we expect it to come through. We didn't build it into our guidance, but it comes through in the next month or two.

Speaker Change: You know, have an impact really late this year, but a more significant impact on 2025. So I'd say at this point stable, you know, pretty stable where we were in the second quarter. And as far as mill utilization, pretty stable to where we were in the second quarter.

Rob Dillard: Color there, Rodger, to a different point here on your leverage in relation to maintaining your investment grade, and it seems like you do have a lot of Robert Coker, Robert Dillard, Unknown Attendee, Gregory Andreopoulos, Howard Coker, Sean Cairns, [inaudible] Yeah, that's a good question. Certainly, we don't feel there is no bright line in terms of leverage for We have really constructive dialogues with both S&P and Moody's, and we think that those are really productive discussions that we've had and will continue to have around the ratings.

Rob Dillard: Kind of to a different point here on your leverage, in regard to maintaining your investment grade, it seems like you do have some buffer where your current ratings are to maintain that investment grade rating. But is there some kind of minimum leverage number or benchmark throughout the next 24 months post closed that you think you need to achieve in order to maintain that investment grade rating? And along those lines, I mean, maybe holistically, why is that so important? And some of your other peers don't stress it as much. I mean, do you have any needs for rank metal debt here, or any covenants depending on maintaining that existing rating?

Speaker Change: Okay, great. Thank you for the additional color there, Rodger. Kind of to a different point here, on your leverage,

Speaker Change: In regard to maintaining your investment grade, it seems like you do have some...

Speaker Change: Along those lines, I mean, maybe holistically, why is why is that so important when some of your other peers don't stress it as much? I mean, do you have any needs for incremental debt here? Or any any covenants depending on maintaining that existing rating?

Rob Dillard: Yeah, that's a good question. Certainly, we don't feel there is no bright line in terms of leverage for investment grade ratings. We have really constructed dialogues with both S and P and booties, and we think that those are really productive discussions that we've had and will continue to have around the rating. They feel very comfortable with kind of the perspective plan for financing Eviosis and, as we said on the call, we're continually thinking about shareholder-friendly ways to improve that financing plan. And we think that really revolves around besides just advancing the strategy and really thinking about the portfolio, we would work creating plans to do these ever more quickly than we additionally originally anticipated.

Speaker Change: Yeah, that's a good question. Certainly, we don't feel there is no bright line in terms of

Speaker Change: Robert Coker, Lisa Weeks, Rodger Fuller, Robert Dillard, Rodger Fuller, Robert Dillard, Rodger

Rob Dillard: They feel very comfortable with kind of the prospective plan for financing EViosis. And, as we said on the call, we're continually thinking about shareholder-friendly ways to improve that financing plan. And we think that really revolves around besides just advancing the strategy and really thinking about the portfolio, we're creating plans to de-lever more quickly than we originally anticipated. And, as Howard mentioned, we're also evaluating the use of equity, whether or not that's going to be the most efficient source of funding for us. So we're being very thoughtful about that, and we have a very constructive relationship with the rating agencies. They do have kind of their own benchmarks around what they would like, and they publish those.

Speaker Change: And we think that really revolves around besides just advancing the strategy and really thinking about the portfolio, we would, were

Rob Dillard: And as Howard mentions, we're also evaluating the use of equity, whether or not that's going to be the most efficient source of funding for us. So we're being very thoughtful about that, and we've got a very constructive relationship with the rating agencies. They do have kind of their own benchmarks around what they would like, and they publish those. But I would say that that's part of the constructive dialogue that we have with them because, you know, we're both a paper company and a packaging company from that perspective. And we think as we become more of a packaging company, we'll have a lot more re-way in terms of ratings, and that's a really constructive dialogue that we have there.

Rob Dillard: But I would say that that's part of the constructive dialogue that we have with them because, you know, we're both a paper company and a packaging company from that perspective. And we think as we become more of a packaging company, we'll have a lot more leeway in terms of ratings. And that's a really constructive dialogue that we have there.

Speaker Change: They do have kind of their own benchmarks around what they would like and they publish those, but I would say that

Speaker Change: You know, we're both a paper company and a packaging company from that perspective. And we think as we become more of a packaging company, we'll have a lot more leeway in terms of ratings. And that's a really constructive dialogue that we have there.

George Staphos: Thank you, Rob, and everyone else for the time. Again, if you do have a question, please press star 11 on your telephone and wait for your name to be announced. And our next question will come from George Staphos of Bank of America. Your line is open.

Operator: Thank you, Robin. Everyone else for the time. Again, if you do have a question, please press star 1-1 on your telephone and wait for your name to be announced.

Speaker Change: Again, if you do have a question, please press star 11 on your telephone and wait for your name to be announced.

George Staphos: And our next question will come from George Staffos of Bank of America. Your line has opened. Hi, everyone. Thanks again for taking my questions. Three quick ones.

Speaker Change: And our next question will come from George Staphos of Bank of America. Your line is open.

George Staphos: Hi, everyone. First of all, can you talk about the other specific expenses that impacted the second quarter and why they will go away for the third quarter? Actually occur. Trapped Overhead.

Rob Dillard: First of all, can you talk to the other specific expenses that impacted second quarter and why they go away for the third quarter? as potential divestors go, question two, could some of these actually occur within the consumer segment as it's currently composed and how would you deal with any trapped overhead investment that you've made in the past on your innovation centers which leverage paper and flexibles and metal. And my last question on Rohak Rob, back to that. I know you want to be the strongest Rohak company. I know you're at, you said 11 or 12 percent.

George Staphos: And my last question on Roeck Rob, back to that, I know you want to be the strongest Roeck company. I know you're at, you said 11 or 12 percent. Why not have a goal if that's what you aspire to be? Why not have a percentage target that we can keep evaluating? Thanks and good luck in the quarter.

Rob Dillard: Why not have a goal if that's what you aspire to be? Why not have a percentage target that we can keep evaluating. Thanks and good luck in the quarter. Yeah, thanks, George. On the other specific expenses, it was really around a couple very discrete items. One was just some employee expenses that were extraordinary, really on a year of a year basis. They were just lower last year than you would normally expect. Second is the eight that we had an AR charge that was specific to one customer that we really wanted to be conservative around the expectation for receiving that, and so we took a relatively meaningful charge.

Unknown Speaker: [inaudible] Why not have a goal if that's what you aspire to? Yeah, thanks, George. On the other specific expenses, it was really around a couple of very discreet items. One was just some employee expenses that were extraordinary. Really, on a year over year basis, they were just lower last year than you would normally expect. Second, we had an AR charge that was specific to one customer that we really wanted to be conservative around the expectation of receiving that.

Speaker Change: Yeah, thanks, George. On the other specific expenses, it was really around a couple very discrete items. One was just some employee expenses that were extraordinary, really on a year-over-year basis. They were just lower last year than you would normally expect. Second is we had an AR charge that was

Unknown Speaker: And so we took a relatively meaningful charge. And then we're also kind of constantly evaluating the accruals, and we had an accrual that was meaningful as there was a catch-up from a change in a rate. And so those things all kind of summed together. (Inaudible) In terms of divestitures, yeah, I think it could be in the consumer area.

Speaker Change: We really wanted to be conservative around the expectation for receiving that, and so we took a relatively meaningful charge.

Rob Dillard: And then we're also kind of constantly evaluating the accruals, and we had an accrual that was meaningful as there was a catch up from a change in a rate. And so those things all kind of sum to, you know, a relatively meaningful amount for the quarter, which we thought was extraordinary and worth calling out, you know, just for our comparable basis.

George Staphos: And then we're also kind of constantly evaluating the accruals. And we had an accrual that was meaningful as there was a catch-up from a change in a rate. And so those things all kind of summed to...

Speaker Change: you know, a relatively meaningful amount for the quarter, which we thought was extraordinary and worth worth calling out, you know, just for a comparable basis.

Rob Dillard: Really, the point there is that if you, we don't expect those to reoccur, and then in the third quarter, you should anticipate our margin to be much higher than it was in the second quarter, more in line with the proxy that we get. In terms of devastators, yeah, I think, yeah, it could be, it could be in the consumer area. And George, I'm sorry if it sounds like a bingo. We are, you know, we are in the midst of having to manage a process that involves internal team members, customers, etc. And we'll be rolling out the sentence practical exactly what our plans are, but we do expect, as we said several times during the course of this call, that this should be. It will help us do two things.

Speaker Change: Really, the point there is that we don't expect those to reoccur, and that in the third quarter you should anticipate our margin to be much higher than it was in the second quarter, more in line with the proxy that we gave.

Rob Dillard: And George, I'm sorry, if it sounds like we're being coy, we are, you know, we are in the midst of having to manage a process that involves internal team members, customers, etc. And we'll, we'll be rolling out, as soon as possible, exactly what our plans are. But we do expect, as we said several times during the course of this call, that this should help us do two things.

George Staphos: In terms of divestitures? Yeah, I think, yeah, it could be in the consumer area. And George, I'm sorry, if it sounds like we're being coy, we are, you know, we are in the midst of

Rob Dillard: One goal of simplification, as well as the overall balance sheet implications and financing structure.

Rob Dillard: One, the goal of simplification, as well as the overall balance sheet implications and financing structures. So more to come on that second part. I asked for a follow-up, but the crap... Bandit Pulse, I assume you were referencing.

Rob Dillard: So, more to come on that. Second part, I hate to ask for a follow-up, but the draft, the expanded call system, you were referencing. We see that as a real opportunity across the entire company as we further simplify. As we saw in our first crunch, that we, where we came down the structures that we have today, we generated significant SGA productivity. This is as further leverage as we continue to, so I don't see the real concern as well as any time stranded calls that that was indeed.

Unknown Executive: We see that as a real opportunity across the entire company as we further simplify. As we saw in our first trunk, that we, Thank you all for joining us today and our sincerest apologies for the technical difficulties. We will certainly follow up on that for future improvement. But if you do have any follow-up questions, please contact me, and we'll be happy to set up a follow-up discussion. And we look forward to providing further business updates on our progress in the coming weeks and months. Thank you all again, and have a great day.

Speaker Change: where we came down to the structures that we have today, we generated significant SG&A productivity. This is as part of the leverage as we continue to...

Rob Dillard: Dr. Plesch. It's actually opportunity. Yeah, and on Rohit, George, I love you. You're a finance guy at heart. We love to have targets, and we definitely do internally. We're constantly thinking about how we can push the edge. It's a big part of our strategy to get the Rohit's right. As we get the portfolio more balanced, we can come out with a total company expectation for Rohit. But, as I said, we think that it's going to be a really constructive number that will really show the value of these legacy portfolio that we have and also the ability that we feel like we're going to have to drive really meaningful value in some of these newer businesses that we're really investing in now.

Speaker Change: Yeah, and on RoEx, George, I love you. You're a finance guy at heart. We love to have targets, and we definitely do internally. We're constantly thinking about how we can push the edge. It's a big part of our strategy to get the RoEx right. As we get the portfolio more balanced,

Speaker Change: We can come out with a total company expectation for Relic. But as I said,

Speaker Change: We think that it's going to be a really constructive number that will be

Speaker Change: will really show the value of these legacy portfolios that we have and also the ability that we feel like we're going to have to drive really meaningful value in some of these newer businesses that we're really investing in now.

Operator: Thank you.

Operator: In one moment for our next question. If you do have a question at this time, please press star 11 on your touch-tone telephone. Again, for any additional questions, please press Star 11 on your telephone.

Speaker Change: Thank you.

Speaker Change: If you do have a question at this time, please press star 11 on your touchtone telephone.

Speaker Change: Again, for any additional questions, please press star 11 on your telephone.

Operator: I'm showing no further questions.

Operator: I'll hand it back to management for closing remarks. Thank you all for joining us today. In our sincerest apologies for the technical difficulties. We will certainly follow up on that for future improvement. But if you do have any follow-up questions, please contact me, and we'll be happy to set up a follow-up discussion. And we look forward to providing further business updates on our progress in the coming weeks and months.

Speaker Change: I'm showing no further questions. I'll hand it back to management for closing remarks.

Speaker Change: Thank you all for joining us today and our sincerest apologies for the technical difficulties. We will certainly follow up on that for...

Speaker Change: Future Improvement. But if you do have any follow-up questions, please contact me and we'll be happy to set up a follow-up discussion. And we look forward to providing further business updates on our progress in the coming weeks and months. And thank you all again and have a great day.

Operator: And thank you all again, and have a great day.

Operator: This concludes today's conference call. Thank you for participating.

Operator: You may now disconnect. Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.

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Speaker Change: [inaudible]