Q3 2025 Sonoco Products Co Earnings Call

Speaker #2: Thank you for standing by and welcome to the Sunoco Second Quarter 2025 Earnings Conference Call . All lines have been placed on mute to prevent any background noise .

Speaker #2: After the speaker's remarks , there will be a question and answer session . If you'd like to ask a question during this time , simply press star , followed by the number one on your telephone keypad .

Speaker #2: If you would like to withdraw your question again , press star one . Thank you . I'd now like to turn the call over to Roger Schrum head of Investor Relations and Communications .

Speaker #2: You may begin .

Speaker #3: Thank you , Jean , and good morning , everyone . Yesterday evening , we issued a news release and posted an investor presentation that reviews Sunoco's third quarter 2020 financial results .

Roger Schrum: Thank you, Jeannie, and good morning, everyone. Yesterday evening, we issued a news release and posted an investor presentation that reviews Sonoco Products Company's third quarter 2025 financial results. Both are posted on the investor relations section of our website at sonoco.com. A replay of today's conference call will be available on our website, and we'll post a transcript later this week. If you would turn to slide two, I will remind you that during 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 uncertainties. Therefore, actual results may differ materially. 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 condition and results of operations.

Speaker #3: Both are posted on the Investor Relations section of our website at Sonoco Products Co . A replay of today's conference call will be available on our website , and we'll post a transcript later this week .

Speaker #3: If you would turn to slide two , I will remind you that during today's call , we will discuss a number of forward looking statements based on current expectations , estimates and projections .

Speaker #3: These statements are not guarantees of future performance and are subject to certain risks and uncertainties . Therefore , actual results may differ materially .

Speaker #3: 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 condition and results of operations .

Speaker #3: 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 .

Roger Schrum: 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. Joining me this morning are Howard Coker, President and CEO; Rodger Fuller, Chief Operating Officer and Interim CEO of Sonoco Metal Packaging EMEA; and Paul Joachimczyk, Chief Financial Officer. For today's call, we'll have prepared remarks followed by your questions. If you'll turn to slide four in our presentation, I will now turn it over to Howard.

Speaker #3: Joining me this morning are Howard Coker , president and CEO Rodger Fuller Chief Operating Officer and interim CEO of Sunoco Metal Packaging EMEA .

Speaker #3: And Paul Joachimczyk Chief Financial officer . For today's call , we'll have a prepared remarks followed by your questions . If you'll turn to slide four in our presentation , I will now turn it over to Howard .

Speaker #4: Thank you , Roger , and good morning , everyone . Let me start by saying I am incredibly proud of our team's strong operating performance in the third quarter .

Howard Coker: Thank you, Rodger, and good morning, everyone. Let me start by saying I am incredibly proud of our team's strong operating performance in the third quarter, as we achieved record top-line and bottom-line performance, along with margin expansion despite challenging market conditions, which affected both consumer and industrial demand, particularly in the EMEA region. As slide five shows, net sales grew 57%, and adjusted EBITDA was 37% up, while adjusted EBITDA margin achieved a record 18.1%, due primarily to improving margins from our industrial paper packaging business. Total adjusted earnings grew 29% in spite of higher than expected interest expense. Our consumer packaging sales and operating profit grew 117%, and adjusted EBITDA increased 112%. Most of the improvements came from the addition of Sonoco Metal Packaging EMEA and strong results from our metal packaging U.S. business, where we saw food can volumes up 5%.

Speaker #4: As we achieved record top line and bottom line performance , along with margin expansion . Despite challenging market conditions which affected both consumer and industrial demand , particularly in the EMEA region .

Speaker #4: A slide five shows net sales grew 57% and adjusted EBITDA was 37% , up , while adjusted EBITDA margin achieved a record 18.1% due primarily to improving margins from our industrial paper packaging business .

Speaker #4: Total adjusted earnings grew 29% in spite of higher than expected interest expense . Our consumer packaging , sales and operating profit grew 117% and adjusted EBITDA increased 112% .

Speaker #4: Most of the improvements came from the addition of metal packaging and EMEA , and strong results from our metal packaging . US business , where we saw food canned volumes up 5% .

Speaker #4: Our industrial packaging segment also had an exceptional quarter with operating profits up by 28% and adjusted EBITDA up by 21% . With operating profit and adjusted EBITDA margins grew significantly during the quarter and registered an eight consecutive quarter of margin improvement in the industrial segment .

Howard Coker: Our industrial packaging segment also had an exceptional quarter, with operating profits up by 28% and adjusted EBITDA up by 21%. Both operating profit and adjusted EBITDA margins grew significantly during the quarter and registered an eight-consecutive quarter of margin improvement in the industrial segment. Our industrial team continues to successfully drive our value-based pricing model while achieving solid productivity savings. Paul will go through all the numbers and business drivers for the quarter in a few minutes. As shown on slide six, we successfully entered into an agreement on September 7 to sell our ThermoSafe temperature-assured packaging business to Arsenal Capital Partners for a total purchase price of up to $725 million. We expect the transaction to close during the quarter, subject to regulatory review.

Speaker #4: Our industrial team continues to successfully drive our value-based pricing model while achieving solid productivity savings. Paul will go through all the numbers and business drivers for the quarter in a few minutes.

Speaker #4: As shown on slide six , we successfully entered into an agreement on September 7th to sell our thermal safe temperature assured packaging business to Arsenal Capital Partners for a total purchase price of up to $725 million .

Speaker #4: We expect the transaction transaction to close during the quarter , subject to regulatory review . The purchase price includes $650 million in cash at closing and additional Earnout opportunity of up to $75 million based on the business's 2025 overall performance .

Howard Coker: The purchase price includes $650 million in cash at closing and an additional earnout opportunity of up to $75 million based on the business's 2025 overall performance. The completion of the sale of ThermoSafe will substantially complete Sonoco's portfolio transformation from a large portfolio of diversified businesses into a stronger, more simplified structure with two core global business segments: consumer packaging, which consists of our global metal and paper can businesses, and industrial packaging, where we have global leadership in uncoated recycled paperboard and converted products. Pro forma for the transaction, the expected net proceeds from the divestiture, excluding any additional considerations, are projected to reduce our net leverage ratio to approximately 3.4 times. I'm now going to turn the call over to Rodger Fuller to give us an update on activities and where we are at Sonoco Metal Packaging EMEA.

Speaker #4: The completion of the sale of Thermal Safe will substantially complete Sunoco's portfolio transformation from a large portfolio of diversified businesses into a stronger , more simplified structure with two core global business segments Consumer Packaging , which consists of our global metal and paper , can businesses and industrial packaging , where we have global leadership and uncoated recycled paperboard and converted products .

Speaker #4: Performer for the transaction. The expected net proceeds from the divestiture, excluding any additional considerations, are projected to reduce our net leverage ratio to approximately.

Speaker #4: I'm now going to turn the call over to Rodger Fuller to give us an update on activities and where we are at SMP .

Speaker #4: EMEA. Yeah. Thank you, Howard.

Rodger Fuller: Yes, thank you, Howard. Good morning, everyone. If you turn to slide eight, I'll provide a brief review of metal packaging EMEA's third quarter performance, an outlook for the rest of the year, and actions we're taking to improve performance in 2026 and beyond. Third quarter results modestly improved over the same quarter last year, with adjusted EBITDA up approximately 9%, and EBITDA margins improving to approximately 18%. Food can units increased 3.5% year over year, but unfortunately, business activity was below our expectations due to macroeconomic headwinds and weaker than anticipated seafood availability. With the vegetable harvest season substantially behind us, we believe the fourth quarter will likely be weaker than we had anticipated based on our customers' projected demand throughout the EMEA region. In response to these challenges, we're taking actions now to improve our competitive position and drive cost savings to accelerate our performance in 2026.

Speaker #3: Good morning .

Speaker #4: Everyone, if you turn to slide.

Speaker #3: Eight I'll provide a brief review of metal packaging . And Mia's third quarter performance and outlook for the rest of the year . And actions we are taking to improve performance in 2026 and beyond .

Speaker #4: Third quarter .

Speaker #3: Results modestly improved over the same quarter last year , with adjusted EBITDA up approximately 9% and EBITDA margins improving to approximately 18% . Food can units increased 3.5% year over year , but unfortunately , business activity was below our expectations due to macroeconomic headwinds and weaker than anticipated seafood availability .

Speaker #3: With the vegetable harvest season substantially behind us , we believe the fourth quarter will likely be weaker than we had anticipated . Based on our customers projected demand throughout the EMEA region .

Speaker #3: In response to these challenges , we're taking

Speaker #3: actions now to improve our competitive 3.4 times position and drive cost savings to accelerate our performance in 2026 . As I mentioned on our last call , our team is making tremendous progress in achieving our targeted 100 million and annual run rate synergies by the end of 2026 , with savings benefiting our entire consumer metal and paper can portfolio .

Rodger Fuller: As I mentioned on our last call, our team is making tremendous progress in achieving our targeted $100 million in annual run-rate synergies by the end of 2026, with savings benefiting our entire consumer metal and paper can portfolio. Our team expects to further drive procurement synergies in 2026 after they were delayed in 2025 due to the late closing of the acquisition. In addition, we're right-sizing our manufacturing footprint to match our customers' demand profile and better leverage our operating costs. We're also building out our commercial team and have active growth projects that are focused on increasing our exposure to more non-seasonal products. As an example, we're making capital investments to gain new pet food and seafood business in Eastern Europe, which will improve our mix with our large vegetable can customers.

Speaker #3: Our team expects to further drive procurement synergies in 2026 , after they were delayed in 20 2025 due to the late closing of the acquisition .

Speaker #3: In addition, we're rightsizing our manufacturing footprint to match our customers' demand profile and better leverage our operating costs. We're also building out our commercial team and have active growth projects that are focused on increasing our exposure to more non-seasonal products.

Speaker #3: As an example , we're making capital investments to gain new pet food and seafood business in Eastern Europe , which will improve our mix with our large vegetable can .

Speaker #3: Customers . In closing , while I'm not satisfied with our recent performance , I'm encouraged by the receptiveness Sunoco has received from our customers and our team's focus on taking the necessary actions to drive improved performance .

Rodger Fuller: In closing, while I'm not satisfied with our recent performance, I'm encouraged by the receptiveness Sonoco has received from our customers and our team's focus on taking the necessary actions to drive improved performance going into 2026. I'll now turn over to Paul for the quarterly financial review.

Speaker #3: Going into 2026, I'll now turn it over to Paul for the quarterly financial review. Thank you.

Speaker #4: Roger .

Paul Joachimczyk: Thank you, Roger. I am pleased to present the third quarter financial results, starting on slide 10 of the 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 GAAP to non-GAAP EPS reconciliation is in the appendix of this presentation as well as in the press release. Adjusted EPS was $1.92, representing a 29% year-over-year increase. This improvement was primarily driven by favorable price cost performance of $43.5 million, the EMEA metal packaging acquisition, and continued strong productivity of $11 million, primarily from our converting businesses. These benefits were partially offset by a favorable volume mix, an increase in the effective tax rate by approximately 180 basis points, and slightly higher legacy interest expense. Third quarter net sales for continued operations increased 57% to $2.1 billion.

Speaker #3: I am pleased to present the third quarter financial results starting on slide ten of the 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 .

Speaker #3: The GAAP to non-GAAP .

Speaker #5: EPs reconciliation is in the appendix of this presentation , as well as in the press release . Adjusted EPs was $1 . 92 , representing a 29% year over year increase .

Speaker #5: This improvement was primarily driven by favorable price cost performance of 43.5 million . The EMEA Metal Packaging Acquisition and continued strong productivity of 11 million , primarily from our converting businesses .

Speaker #5: These benefits were partially offset by unfavorable volume mix and increase in the effective tax rate by approximately 180 basis points and slightly higher legacy interest expense .

Speaker #5: Third quarter net sales for continued operations increased 57% to 2.1 billion . This change was driven by the acquisition of metal Packaging EMEA .

Paul Joachimczyk: This change was driven by the acquisition of Sonoco Metal Packaging EMEA, strong pricing disciplines across all segments, and the favorable impact of FX. Adjusted EBITDA of $386 million was up by an outstanding 37%, and adjusted EBITDA margin improved by 130 basis points to 18.1%. This was driven by strong price cost discipline, continued productivity, and the net impact of acquisitions and divestitures. These benefits were partially offset by volume softness in the consumer and industrial segments and an unfavorable sales mix in our all other businesses. Slide 11 presents information on our operating cash flows, which was a source of cash of $292 million during the quarter, up more than 80% over the prior year. Gross capital investments for the quarter were $65 million, and our annual capital spending is tracking below our $360 million target for the year.

Speaker #5: Strong pricing disciplines across all segments , and the favorable impact of FX adjusted EBITDA of 386 million was up by an outstanding 37% and adjusted EBITDA margin improved by 130 basis points to 18.1% .

Speaker #5: This was driven by strong price cost discipline continued productivity and the net impact of acquisitions and divestitures . These benefits were partially offset by volume softness in the consumer and industrial segments , and an unfavorable sales mix in our all other businesses .

Speaker #5: Slide 11 presents information on our operating cash flows, which was a source of cash of $292 million during the quarter, up more than 80% over the prior year.

Speaker #5: Gross capital investments for the quarter were $65 million, and our annual capital spending is tracking below our $360 million target for the year.

Speaker #5: As we enter our fourth quarter , we expect similar operating cash flow performance as last year as the seasonal build of net working capital reverses .

Paul Joachimczyk: As we enter our fourth quarter, we expect similar operating cash flow performance as last year, as the seasonal build of networking capital reverses. Slide 12 has our consumer segment results on a continuing operations basis. Consumer sales were up 117% due to the Sonoco Metal Packaging EMEA acquisition, price increases implemented to offset the effects of inflation and tariffs, and the favorable impact of foreign currencies. This was offset by an unfavorable volume mix. Our domestic metal packaging business presented higher sales versus the prior year due to higher food can units and price, which was offset by an unfavorable mix. Sales for our global rigid paper can business was relatively flat, as favorable price was offset by mix and lower volumes.

Speaker #5: Slide 12 has our consumer segment results on a continuing operations basis . Consumer sales were up 117% due to the metal packaging EMEA acquisition price increases implemented to offset the effects of inflation and tariffs , and the favorable impact of foreign currencies .

Speaker #5: This was offset by unfavorable volume mix. Our domestic metal packaging business presented higher sales versus the prior year due to higher food can units and price, which was offset by unfavorable mix. Sales for our global rigid paper cam business were relatively flat, as favorable price was offset by mix and lower volumes.

Speaker #5: Adjusted EBITDA from continuing operations grew an extraordinary 112% year over year due to the acquisition variable price disciplines, continued productivity gains, and the favorable impact of foreign currency exchange rates.

Paul Joachimczyk: Adjusted EBITDA from continuing operations grew an extraordinary 112% year-over-year due to the acquisition, favorable price disciplines, continued productivity gains, and the favorable impact of foreign currency exchange rates. This was offset by weaker volume year-over-year. Now let's turn to our industrial segments slide on slide 13. Sales were flat year-over-year at $585 million, with the recovery of price offset by volume softness and the exit from our Chinese paper operations. Adjusted EBITDA margins expanded 360 basis points year-over-year in the third quarter and increased by $21 million to $123 million, representing a 21% increase. Adjusted EBITDA was positively impacted by price, improved productivity, and fixed cost savings resulting from footprint rationalizations in North America and headcount reductions in Europe and Asia. Slide 14 has the results for the all other businesses. All other sales were $108 million, and adjusted EBITDA was $21 million.

Speaker #5: This was offset by weaker volume year over year . Now let's turn to our industrial segments . Slide on . Slide 13 . Sales were flat year over year at 585 million , with the recovery of price offset by volume , softness and the exit from our Chinese paper operations .

Speaker #5: Adjusted EBITDA margins expanded 360 basis points year over year in the third quarter , and increased by 21 million to 123 million , representing a 21% increase .

Speaker #5: Adjusted EBITDA was positively impacted by price , improved productivity and fixed cost savings resulting from footprint rationalizations in North America and headcount reductions in Europe and Asia .

Speaker #5: Slide 14 has the results for the all other businesses . All other sales were 108 million and adjusted EBITDA was 21 million . Sales were higher versus prior year due to higher volumes in thermal safe adjusted EBITDA improved 2% to 21 million as favorable productivity and fixed cost savings more than offset the negative impact of unfavorable mix and price cost .

Paul Joachimczyk: Sales were higher versus prior year due to higher volumes in ThermoSafe. Adjusted EBITDA improved 2% to $21 million, as favorable productivity and fixed cost savings more than offset the negative impact of unfavorable mix and price cost. Transitioning to our outlook for the remainder of the year, as shown on slide 15, we are tightening our guidance with net sales in the range of $7.8 billion to $7.9 billion. The European market continues to soften, and we are seeing pressures in the North American market with slightly lower demand. From an adjusted EBITDA perspective, we are narrowing our range to $1.3 billion to $1.35 billion, with strength in the performance of our North American businesses offset by the softness in the European and Asian markets. We are reducing our adjusted EPS range to $5.65 to $5.75. This adjustment is primarily driven by subdued market conditions outside of the U.S.

Speaker #5: Transitioning to our outlook for the remainder of the year . As shown on slide 15 , we are tightening our guidance with net sales in the range of 7.8 billion to 7.9 billion .

Speaker #5: The European market continues to soften , and we are seeing pressures in the North American market with slightly lower demand from an adjusted EBITDA perspective .

Speaker #5: We are narrowing our range to 1.3 billion to 1.35 billion , with strengths in the performance of our North American businesses , offset by the softness in the European and Asian markets .

Speaker #5: We are reducing our adjusted EPs range to $5.65 to $5.75 . This adjustment is primarily driven by subdued market conditions outside of the United States and the deleveraging process occurring across those facilities as sales volumes declined .

Paul Joachimczyk: and the deleveraging process occurring across those facilities as sale volumes declined. Reflecting on the third quarter, July commenced successfully surpassing our expectations. However, August and September experienced declines, mirroring the market's weakening trend. This downward trajectory is continuing into our fourth quarter, which serves as the primary rationale for the lowered outlook. An additional item of note is our guidance assumes a full quarter of ThermoSafe performance. Given the projected pressures in our sales and operating profits, we are adjusting our operating cash flows range to $700 million to $750 million. Over the next 90 days, we'll be closing out 2025 and getting ready for our Investor Day, which is scheduled in New York on February 17, 2026. We are very excited about the strength, stability, and simplification of the new Sonoco and the competitive advantage it creates in the marketplace.

Speaker #5: Reflecting on the third quarter , July commenced successfully surpassing our expectations . However , August and September experienced declines , mirroring the markets weakening trend .

Speaker #5: This downward trajectory is continuing into our fourth quarter, which serves as the primary rationale for the lowered outlook. An additional item of note is our guidance assumes a full quarter of thermal safe performance.

Speaker #5: Given the projected pressures in our sales and operating profits , we are adjusting our operating cash flows range to 700 million to 750 million .

Speaker #5: Over the next 90 days , we'll be closing out 2025 and getting ready for our Investor Day , which is scheduled in New York on February 17th , 2026 .

Speaker #5: We are very excited about the strength , stability and simplification of the new Sunoco and the competitive advantage it creates in the marketplace .

Speaker #5: We intend to lay out our roadmap over the next three years to show how we're going to grow our businesses , strengthen our balance sheet , and continue to drive margin expansion .

Paul Joachimczyk: We intend to lay out our roadmap over the next three years to show how we're going to grow our businesses, strengthen our balance sheet, and continue to drive margin expansion. I'll now turn the call back over to Howard for closing comments.

Speaker #5: I will now turn the call back over to Howard for closing comments .

Speaker #4: Great . Thanks , Paul . We look ahead at the remainder of the year . Our top priorities are to continue building momentum for growth and improving our competitive position by further reducing our cost structure .

Howard Coker: Great. Thanks, Paul. We look ahead at the remainder of the year. Our top priorities are to continue building momentum for growth and improving our competitive position by further reducing our cost structure. As the graphic shows on slide 16, we believe our consumer and industrial businesses have solid funnels in place with several new products and market launches planned in 2026 and beyond. We believe we can continue to gain additional wins with both aerosol and food can customers in North America, as we have successfully done through this year with can units up approximately 9%. As Rodger mentioned, Sonoco Metal Packaging EMEA continues to achieve market wins, which will provide growth in 2026 and beyond.

Speaker #4: As a graphic shows on slide 16 , we believe our consumer and industrial businesses have solid funnels in place with several new products and market launches planned in 2026 and beyond .

Speaker #4: We believe we can continue to gain additional wins with both aerosol and food . Can customers in North America , as we have successfully done through this year with canned units , approximately 9% , as Roger mentioned , metal packaging and EMEA continues to achieve market wins , which will provide growth in 26 and beyond .

Speaker #4: Also , we believe our rigid paper containers business is on the cusp of reigniting growth in global global stack chips , and we continue to launch new all paper cans and paper bottom cans for customers looking to substitute with less sustainable substrates .

Howard Coker: Also, we believe our rigid paper containers business is on the cusp of reigniting growth in global stacked chips, and we continue to launch new all-paper cans and paper bottom cans for customers looking to substitute with less sustainable substrates. Finally, our industrial packaging segment is purposefully driving share gains while focusing on new product categories such as wire and cable reels, where we experienced double-digit growth in the third quarter, as well as new markets and applications for URB paper. If you turn to slide 17, I'll make some final comments with the planned sale of ThermoSafe. We will be entering the next stage of our transformation journey, which is focused on optimizing our operating footprint and reducing future support function costs to align them with the needs of our now simpler portfolio. Our restructurings are never easy.

Speaker #4: Finally , our industrial packaging segment is purposefully driving share gains while focusing on new product categories such as wire and cable reels , where we experienced double digit growth in third quarter , as well as new markets and applications for Erb paper .

Speaker #4: If you turn to slide 17, I'll make some final comments. With the planned sale of Thermos, we will be entering the next stage of our transformation journey, which is focused on optimizing our operating footprint and reducing future support function costs to align them with the needs of our now simpler portfolio.

Speaker #4: While restructurings are never easy , they are necessary . If we are to realize the full value of these portfolio changes . As an example , we recently closed a 25,000 ton per year IRB machine in Mexico City , which eliminates an older , higher cost machine and allows us to better balance our North American mill network .

Howard Coker: They're necessary if we are to realize the full value of these portfolio changes. As an example, we recently closed a 25,000-ton per year URB machine in Mexico City, which eliminates an older, higher-cost machine and allows us to better balance our North American mill network. As Rodger mentioned, we expect to continue to drive actions to meet our synergy target and expect to further optimize our EMEA footprint to better serve our customers and to react to changing market conditions. With a simplified operating model, also comes additional opportunities to optimize support functions. We've actioned approximately $25 million in annual savings from stranded costs left from divested businesses. We're implementing additional actions that will enable our businesses to fully leverage our market capabilities and generate strong cash flow. We've added a save-the-date reminder of our Investor Day in New York on slide 18 of our presentation.

Speaker #4: As Roger mentioned, we expect to continue to drive actions to meet our synergy target and expect to further optimize our EMEA footprint to better serve our customers and to react to changing market conditions with a simplified operating model.

Speaker #4: Model. Also comes additional opportunities to optimize support functions if actioned. Approximately $25 million in annual savings from stranded costs left from divested businesses were achieved by implementing additional actions that will enable our businesses to fully leverage our market capabilities and generate strong cash flow.

Speaker #4: We've added a save to date reminder of our Investor Day in New York on slide 18 of our presentation . I look forward to sharing our growth plans and the significant savings and value capture we expect to unlock with our simplified , focused operating vision .

Howard Coker: I look forward to sharing our growth plans and the significant savings and value capture we expect to unlock with our simplified focused operating vision. With that, operator, we will now take any questions.

Speaker #4: So, with that operator, we will now take any questions.

Speaker #2: Thank you . We will now begin the question and answer session . If you would like to ask a question , please press star one on your telephone keypad to raise your hand and join the queue .

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Gabe Hodge with Wells Fargo. Your line is open.

Speaker #2: If you would like to withdraw your question , simply press star one again and your first question comes from the line of Gabe Hardy with Wells Fargo .

Speaker #2: Your line is open .

Speaker #6: Good morning Howard , Roger and Paul , thanks for all the detail .

[Analyst]: Good morning, Howard, Rodger, and Paul. Thanks for all the detail.

Speaker #4: Good morning guys .

Speaker #6: I wanted to dig into , I guess , the European food can business . It feels like there's a couple of mixed signals here .

Howard Coker: Morning, Gabe.

[Analyst]: I wanted to dig into, I guess, the European food can business. It feels like there's a couple of mixed signals here. I'm thinking about you guys talking to win some share, I guess, in seafood. I appreciate you talked about some powdered formula wins. Just maybe more near term, you're talking about Q4 maybe getting a little bit sequentially weaker. I'm curious if that's associated with a shortened vegetable pack or if there's something unique going on there. I thought kind of in the second quarter, you talked about Northern Africa, some disappointing seafood trends. I'm just curious your increasing exposure there. The last part on the footprint rationalization or consolidation, what's going on there? It felt like that business was pretty well optimized when you acquired it. If you could just elaborate there. Thank you.

Speaker #6: And I'm thinking about you guys talking to to win some share . I guess in seafood . I appreciate you talked about some powdered formula wins , but just maybe more near-term , you're talking about Q4 maybe getting a little bit sequentially weaker .

Speaker #6: I'm curious if that's associated with a shortened vegetable pack or if there's something unique going on there. And then I thought kind of in the second quarter, you talked about Northern Africa's some disappointing seafood trends.

Speaker #6: I'm just curious about your increasing exposure there. And then the last part on the footprint rationalization or consolidation—what's going on there? It felt like that business was pretty well optimized when you acquired it.

Speaker #6: If you could just elaborate there . Thank you .

Speaker #3: Yeah . Gabe good morning . Roger . Try to hit all three of those . The first one on volume . First of all , when you look at the third quarter volumes , you know , we had guided to mid-single digit canned units up quarter over quarter .

Howard Coker: Yeah, Gabe, good morning. Rodger, I'd hit all three of those. The first one on volume. First of all, when you look at the third quarter volumes, you know we had guided to mid-single-digit can units up quarter over quarter. We came in at 3.5%. The seasonal business, fruits and vegetables, for the third quarter came in almost exactly as expected. The shortfall was in Africa, and it was again the sardine issue in Morocco. Plus, we have a plant in Ghana which supplies tuna and other products. It primarily supplies one customer, and that customer's projections were too high. That was down. If you strip out Africa for the third quarter, we would have been well into that mid-single-digit range. As we look at the fourth quarter, what we're seeing and what we're hearing from our customers, the seasonal business is ramping down.

Speaker #3: We came in at 3.5%. The seasonal business of fruits and vegetables for the third quarter came in almost exactly as expected. The shortfall was in Africa, and it was again the sardine issue in Morocco.

Speaker #3: Plus , we have a plant in Ghana which supplies tuna and other products that primarily supplies one customer . And that customer is projections were too high and that was and that was down .

Speaker #3: So if you strip out Africa for the for the third quarter , we would have been in that mid well into that mid-single digit range .

Speaker #3: So as you look at the fourth quarter , what we're seeing and what we're hearing from our customers and the seasonal business is ramping down .

Speaker #3: So we'll have some seasonal business continue in October . But it is ramping down what we're hearing from our customers . And while we take the guide down for the fourth quarter for for the EMEA volume , is there going to be very sensitive to any inventory build in the fourth quarter due to what they see as macroeconomic conditions ?

Howard Coker: We will have some of the seasonal business continue in October, but it is ramping down. What we're hearing from our customers and why we take the guide down for the fourth quarter for the EMEA volume is they're going to be very sensitive to any inventory build in the fourth quarter due to what they see as macroeconomic conditions. Technically, this could help us in the first quarter, but again, they're watching their inventories very closely, and we're watching the Africa business very closely to see how that sardine business improves. We've not seen it this year. We're not expecting it, and we're not guiding that for the fourth quarter.

Speaker #3: Technically , this could help us in the first quarter , but again , they're watching the inventories very closely and we're watching the Africa business very closely to see how that sardine business improves .

Speaker #3: We've not seen it this year . We're not expecting it . And we're not guiding that for the for the fourth quarter . When you talk about the footprint issues , you know , the number one issue is for me right now is Africa .

Howard Coker: When you talk about the footprint issues, the number one issue for me right now is Africa, because if you look across the board and sardines, again, primary in Morocco, other fish products in Ghana and others, we do have to address our footprint there and our cost base there, and we're actively doing that. We've also started some negotiations in France to do some continued footprint optimization around our metal in supply across our platform, which was expected, and we intended to do that as we came into the acquisition. That was as expected. Yes, it's been a little confusing. The sardine business down hundreds of millions of units over a few-year period is a fact. It's not really an excuse. It's just a fact. It's something that we're dealing with, and we've got to really get after the Africa footprint. I hope that covers some of the confusion.

Speaker #3: Because if you look across the board and sardines again , primary Morocco , other fish products in Ghana and others , we we do have to address our footprint there and our cost base there .

Speaker #3: And we're actively , actively doing that . We've also started some negotiations in France to do some continued footprint optimization around our metal end supply across our platform , which was expected , and we intended to do that as we came into the acquisition .

Speaker #3: So that was as expected. So yes, it's been a little confusing. The sardine business is down hundreds of millions of units over a few-year period; that is a fact.

Speaker #3: You know , it's not really an excuse . It's just a fact . And it's something that we're dealing with and we've got to really get after the the Africa footprint .

Speaker #3: So I hope that covers some of the confusion. I think, Howard, you want to follow up.

Howard Coker: I think, Howard, you want to follow up? Yeah, sure. You know.

Speaker #4: Yeah , sure . You know , Gabe , thanks for your question . What I would say is first off , we are really , really pleased with this acquisition .

Roger Schrum: Gabe, thanks for your question. What I would say is, first off, we are really, really pleased with this acquisition, the people, the technology, the market position, all the things that you point out, optimization. We, as Rodger just said, see more opportunity there. Yes, we are indeed disappointed in how we're going to finish up the year and what the fourth quarter is rolling to. Roger talked to the main points there. We did this to create a global platform. Consumer for the first quarter ever is one product, basically. It's cans. It's cans made from steel, aluminum, and paper. That's it. We have a clear line of sight, as we've talked about in terms of the synergies associated with the acquisition. What really excites us is what we can do from a one-consumer perspective.

Speaker #4: The people , the technology , the market position , all the things that you point out , optimization . We we , as Roger just said , we see we see more opportunity there .

Speaker #4: And yes , we are indeed disappointed in how we're going to finish up the year and what the fourth quarter is going to .

Speaker #4: And, and again, Roger talked to the main points there, but we did this to create a global platform consumer for the first quarter ever as one product.

Speaker #4: Basically it's cans . It's cans made from steel , aluminum and paper . That's it . And so we have clear line of sight as we've talked about in terms of the synergies associated with the acquisition .

Speaker #4: But what really excites us is what we can do from a one consumer perspective . We are very early in the process , but some of the structural commercial and other opportunities that are materializing across our three formats metal , our legacy , rigid paper and steel , the steel , aluminum or creating some really , really exciting opportunities that we're working now .

Roger Schrum: We are very early in the process, but some of the structural, commercial, and other opportunities that are materializing across our three formats: metal, our legacy rigid paper, and steel and the aluminum are creating some really, really exciting opportunities that we're working now. As we talked about February, when we go into February, we'll be able to talk more about different ways to manage, run, go to market than we ever even thought about as we started on this journey that are incremental that, again, we'll talk about in more detail in February.

Speaker #4: And so as we talked about February , when we go into February , we'll be able to talk more . But different ways to manage run , go to market than we ever even thought about as we started on this journey that our incremental that again , we'll talk about in more detail February .

Speaker #6: Thank you for that , Howard . I unfortunately , we tend to be greedy over here . I guess if we think about big moving parts into 2026 , just to make sure we're calibrated properly , and we picked the midpoint 1325 just to remind us that does include 50 million TFP contribution in the first quarter .

[Analyst]: Thank you for that, Howard. Unfortunately, we tend to be greedy over here, I guess. If we think about big moving parts into 2026, just to make sure we're calibrated properly, and we pick the midpoint, $1,325, just to remind us, that does include $50 million TFP contribution in the first quarter. Then assuming that the ThermoSafe transaction closes, that would be another $50 to $55 million adjustment, again, starting with that $1,325. You've talked about actioning about $25 million of stranded cost savings, you know SG&A, etc. I'm not assuming all of that hits in 2026, but a decent portion of it. You know we'll make our own assumptions about volume FX and price cost. Is there anything else that we should be thinking about?

Speaker #6: And then assuming that the thermal safe transaction closes , that would be another 50 to $55 million adjustment . Again , starting with that 1325 , you've talked about Actioning , about 25 million of stranded cost savings and a etc.

Speaker #6: . I'm not assuming all of that hits in 26 , but but a decent portion of it . And then we'll make our own assumptions about volume and price .

Speaker #6: Cost . Is there anything else that we should be thinking about ? I mean , are you would you say in the fourth quarter you talked about Roger throttling , maybe production in the food can business to keep inventories in check ?

[Analyst]: I mean, are you, would you say in the fourth quarter you talked about, Rodger, throttling maybe production in the food can business to keep inventories in check? Do we have an estimate of order of magnitude what that might be hitting Q4 earnings?

Speaker #6: You know , do we have an estimate of , of order of magnitude , what that might be hitting Q4 earnings .

Speaker #5: Yeah Gabe this is Paul . And you know , answer your question there too . You're thinking about the stranded costs . You're thinking about TFP and thermal safe .

Paul Joachimczyk: Yeah, Gabe, this is Paul. You know, to answer your question there too, you're thinking about the stranded costs. You're thinking about TFP and ThermoSafe, exactly correct. I'd say the one element that you probably have to factor into your model for next year is the reduced interest expense that we're going to be using the proceeds from the ThermoSafe sale and transaction that Howard talked about earlier in the call. All of those proceeds will go directly to debt reduction. I'd say that'd be the largest element to change on there too. If you think about our Q4 performance that's out there, you can see our operating cash flow guide did come down. That does create a little bit of a strain on the ability to pay down our debt. That's why we are experiencing a little bit of higher interest rate expense that's out there too.

Speaker #5: Exactly . Correct . I'd say the one element you probably have to factor into your model for next year is the reduced interest expense that we're going to be using .

Speaker #5: The proceeds from the thermal safe sale and transaction that Howard talked about earlier in the call . All of those proceeds will go directly to debt reduction .

Speaker #5: So I'd say that would be the largest element to change on there , too . And if you think about our Q4 performance that's out there , you can see our operating cash flow guide did come down .

Speaker #5: That does create a little bit of a strain on the ability to pay down our debt . So that's why we are experiencing a little bit of higher interest rate expense that's out there too .

Speaker #5: So as you're modeling in your Q4 projections that are out there , and this wasn't a direct question , but interest expense should be in the range of around $50 million for the quarter .

Paul Joachimczyk: As you're modeling in your Q4 projections that are out there, and this wasn't a direct question, interest expense should be in the range of around $50 million for the quarter. All the other performance will be a little bit muted just due to the overall consumer demands that we're seeing really in the EMEA regions that are out there today.

Speaker #5: And all the other performance will be a little bit muted just due to the overall consumer demands that we're seeing really in the EMEA regions that are out there today.

Speaker #6: Thank you .

[Analyst]: Thank you.

Speaker #2: Your next question comes from the line of George Staphos with Bank of America . Your line is open .

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

Speaker #7: Thanks , everyone . Good morning . Thanks for the details and congratulations on the progress . I guess my first question , I know we'll get more of this in February , but is it possible at this juncture to quantify some of the cost or revenue synergies you expect to get from having a metal and paper ?

[Analyst]: Thanks, everyone. Good morning. Thanks for the details, and congratulations on the progress. I guess my first question, I know we'll get more of this in February, but is it possible at this juncture to quantify some of the cost or revenue synergies you expect to get from having a metal and paper can business together? Can you give us a couple of, for instances, in terms of what you already think you might be able to pick up commercially?

Speaker #7: Can business together ? And can you give us a couple of for instances in terms of what you already think you might be able to pick up commercially ?

Speaker #4: Yeah . You know , George , you want to do you want to do your follow ups now or .

Howard Coker: Yeah. You know, George, you want to do your follow-ups now?

Speaker #3: No .

Speaker #7: Let's , let's , let's we'll start first with that question , okay .

[Analyst]: Let's start first with that question, if possible.

Speaker #4: Yeah . Yeah I know and I hate it that you because you but you started out correctly . It's it's too early for us .

Howard Coker: Yeah, I know. I hate it that you, because you, but you started out correctly. It's too early for us. I truly mean it. It's been in the last, I don't know, month or so that we've, or two, that we've really got into this, and things have started to settle down from an integration perspective. We start stepping back, and we're saying, "Wow, you know we've got plants on top of plants around the world. How are we managing geographically? How are we managing substrates that are very, very similar?" We've got a number in mind, but we got to work that a little more. We're actioning now to be in a position to start generating the savings side of this thing as early as the first of next year.

Speaker #4: I truly mean it . It's been in the last , I don't know , month or so that we've or to that we've really got into this and things have started to settle down from an integration perspective .

Speaker #4: When we start stepping back and we're saying , wow , you know , we've got plants on top of plants around the world , how are we managing ?

Speaker #4: Geographically , how are we managing substrates that are very , very similar ? You know , so it's we got we got a number in mind , but we gotta work that a little more .

Speaker #4: And it but we're actioning now to , to be in a position to start generating the savings side of this thing as early as the first of next year .

Speaker #7: But what do you think ? What do you think the , the , the long term Ebit growth is for the consumer business , as it's currently constructed .

[Analyst]: What do you think the long-term EBIT growth is for the consumer business as it's currently constructed? The reason behind the question, we recognize all the M&A heavy lifting that's been going on at the company the last year and a half, two years. Having said that, this quarter, you're very happy with the platform. You love this and the structure, etc. The sardines don't swim. The pack is late, and the volumes wind up being really not particularly good, nor is the earnings. You spend a lot of capital to build out this platform. That's kind of the reason behind the question. If you had a view on what you think the long-term EBIT growth is for the combined consumer business, that's what's driving the question. If you had a view at this juncture, if not, we can move to the next question.

Speaker #7: And look , the reason behind the question , we recognize all the M&A heavy lifting that's been going on at the company the last year and a half , two years , having said that , you know , this quarter , we you know , you're very happy with the platform .

Speaker #7: You love this the the structure , etc. . But the sardines don't swim . You know , the pack is late and the volumes wind up being really not particularly good .

Speaker #7: And nor is the earnings . And you spend a lot of capital to build out this platform . And so that's kind of the reason behind the question .

Speaker #7: So if you had a view on what you think the long term Ebit growth is for the combined consumer business , that's what's driving the question .

Speaker #7: If you had a view at this juncture , if not , we can we can move to the next question .

Speaker #4: Yeah . Well , we have a positive view . I can't sit here and give you a percentage point at this . This time .

Howard Coker: Yeah. We have a positive view. I can't sit here and give you a percentage point at this time, but we did this for that very reason, to grow the profitability of the company. You can talk about individual, fair enough, in terms of I'm a hell of a fisherman, but I can't guarantee you that I'm going to catch fish every time I go. That's the thing. You worry about your controllables, not your non-controllables. That's where Rodger talked about getting right-sized structuring. When I talk about, and you asked about commercial opportunities across substrates, it's amazing once we started putting pen to paper to say how many people are buying one or the other from us that we could materially take advantage of.

Speaker #4: But we did this for that very reason to grow the profitability of the company . And you can talk about individual fair . Fair enough in terms of I'm a hell of a fisherman , but I can't guarantee you that I'm going to catch fish every time I go .

Speaker #4: But that's the thing you worry about your controllables you're not your non controllables . And that's where Roger talked about getting right size structuring and when I talk about and you asked about commercial opportunities across substrates , it's amazing .

Speaker #4: Once we started putting pen to paper to see how many people are buying one or the other from us, that we could materially take advantage of.

Speaker #4: So all our conversations right now , all of our actions that we're taking right now , are to do exactly what you're saying .

Howard Coker: All our conversations right now, all of our actions that we're taking right now are to do exactly what you're saying the expectation should be, that we should be growing our profitability on into the long term. We have some very chunky growth opportunities in front of us as we sit here today. That's without consideration of what if we go to market in a different way, what if we structure our plants in a different way that gives us the positive viewpoint that we have. I'm really sorry that I can't say, "Hey, this is, you know, it's going to be 8.75% going forward." We'll talk about this in February.

Speaker #4: The expectation should be that we should be growing our profitability on into the long term . And we have some very chunky growth opportunities in front of us as we sit here today .

Speaker #4: And that's without consideration of what if we go to market in a different way ? What if we structure our plants in a different way ?

Speaker #4: That gives us the positive viewpoint that we have ? And , you know , I'm really sorry that I can't say , hey , this is you know , it's going to be 8.75% going forward .

Speaker #4: I , you know , we'll talk about this in February .

Speaker #7: Okay ? Understand , Howard , I guess next question I had on cans again in the US , I want to say , let alone the two Q sort of commentary , kind of into the third quarter , the commentary was that , you know , maybe it'd be a late pack , but you'd see an uptick in the fourth quarter .

[Analyst]: Okay. Understand, Howard. I guess the next question I had on cans again in the U.S., I want to say, let alone the Q2 sort of commentary, kind of into the third quarter, the commentary was that, you know, maybe it'd be a late pack, but you'd see an uptick in the fourth quarter. What in particular is driving the weaker volume? As regards to third quarter, food cans being up 5%, but I think overall the performance in metal for the third quarter in the U.S. was down low single. Is that just a mix, right? That's pet food versus other end markets or something else behind that?

Speaker #7: What in particular is driving the the weaker volume ? And then as regards the third quarter , food cans being up 5% . But I think overall the performance in metal for the third quarter in the US was down low .

Speaker #7: Single is that that's just mixed right . That's pet food versus other other end markets or something else behind that .

Speaker #4: Yeah , thats just mix . And what I'd say is yeah , it was a good , good pack season . It has carried over into on in North America , into , into October .

Howard Coker: Yep. That's just a mix. What I'd say is, you know, it was a good pack season. It has carried over into, in North America into October. We're actually looking at a, you know, at a pretty reasonable fourth quarter on the food can side of North America. I'd be extremely remiss if I didn't talk about the paper can side of things globally. We've got an issue going on that, you know, what's the appropriate word? I would say temporary situation with a very major customer that is highly material to us, particularly on an international perspective, but certainly touches North America as well. That's been an extremely disappointing, but exciting at the same time, disappointing in terms of the performance as this particular transaction nears closure, but exciting in terms of where this business can go into the future.

Speaker #4: So we're actually looking at a , you know , a pretty , pretty reasonable fourth quarter on the food can side of North America .

Speaker #4: And be extremely remiss if I didn't talk about the paper can side of things globally . You know , we've got an issue going on that , you know , I can , you know , what's the appropriate word I would say temporary situation with a very major customer that is highly material to us , particularly on an international perspective , but certainly touches North America as well .

Speaker #4: And that's been an extremely disappointing but exciting at the same time . Disappointing in terms of the performance that as as this particular transaction nears , nears closure .

Speaker #4: But exciting in terms of where this where this business can go into the future . So we're seeing inventory drawdowns , what we're seeing in the fourth quarter .

Howard Coker: We're seeing inventory drawdowns is what we're seeing in the fourth quarter. That's part of this forecast that we've got in front of you. I look at that as a temporary problem.

Speaker #4: So that's part of this , this , this forecast that we've gotten in front of you . And again , I look at that as a temporary temporary problem .

Speaker #4: .

Speaker #7: Last one quick one . Oak . Prices are really low right now . That's probably helping you a bit on margin . You know hopefully Oak heads up in 2026 for macro reasons and the like any way you will try to , you know , avoid any margin pressure ahead of time or is it will it be really the same sort of mechanisms you've had in the past in terms of pricing and the like ?

[Analyst]: Last one, quick one. OCC prices are really low right now. That's probably helping you a bit on margin. Hopefully, OCC heads up in 2026 for macro reasons and the like. Any way you will try to avoid any margin pressure ahead of time, or will it be really the same sort of mechanisms you've had in the past in terms of pricing and the like, your pass-through mechanisms, and just you'll manage it on the way up just like you always have. Thanks, guys, and good luck in the quarter.

Speaker #7: Your pass through mechanisms and just you'll manage it on the way up , just like you always have . Thanks guys , and good luck in the quarter .

Speaker #4: Yeah . Thanks , George . You know we're going to do what we've always done . But I did just highlight one example in my prepared remarks about preemptively making the right moves in terms of the balance of supply in North America .

Howard Coker: Yeah, thanks, George. We're going to do what we've always done. I did just highlight one example in my prepared remarks about preemptively making the right moves in terms of the balance of supply in North America. If you listen, we're taking 25,000 tons out. It's a really smart thing to do just in and of itself, replacing, coming off of a 25,000-ton machine. Here we're sitting in South Carolina with a 180,000-ton machine with a different cost profile. We'll do what we have to do, what we've done traditionally as it relates to price cost management. We're going to control those things that we can control as well and make decisions like I just announced.

Speaker #4: So .

Speaker #7: Yeah .

Speaker #4: If you listen , you know , we're taking 25,000 tons out and and it's a it's a really smart thing to do just in and of itself replacing coming off of a 25 000 ton machine .

Speaker #4: And here we're sitting in South Carolina with 180,000 ton machine with the with the different cost profile . So we'll we'll do what we have to do , what we've done traditionally , as it relates to price , cost management .

Speaker #4: But we're going to control those things that we can control as well and make decisions like I just announced .

Speaker #7: Very good . Thanks , Howard .

[Analyst]: Very good. Thanks, Howard.

Speaker #3: Yep .

Howard Coker: Yep.

Speaker #2: Your next question comes from the line of John Dunigan with Jefferies . Your line is open .

Operator: Your next question comes from the line of John Dunnigan with Jefferies. Your line is open.

Speaker #8: Good morning guys . Really appreciate all the details here . If if I could start with the IRB mill in Mexico City that you just touched upon , what does that do to your operating rates for the business ?

[Analyst]: Good morning, guys. Really appreciate all the details here. If I could start with the URB mill in Mexico City that you just touched upon, what does that do to your operating rates for the business? What I'm thinking about is, is cost going to end up going up because you have to still supply those same customers? Freight may be more of a headwind next year. If you could touch upon a much larger price cost spread in both industrial packaging, which obviously you had the price increases go through for URB. OCC continues to slide a bit, but overall still quite a bit ahead of where we're expecting. Same with the consumer packaging business. I know there was pricing to help cover some of the tariffs, but price cost spread again seemed outside to our expectations.

Speaker #8: And you know what ? I'm what I'm thinking about is , is , is costs going to end up going up because you have to still supply those same customers .

Speaker #8: So freight , you know , may be more of a headwind next year . And then if you could touch upon , you know , much larger price cost spread in both industrial packaging , which obviously you had the price increases go through for you or be , you know , continues to slide a bit , but overall , still quite a bit ahead of of where we were expecting .

Speaker #8: Same with the consumer packaging business . I know there was pricing to to help cover some of the tariffs , but price cost spread seemed outside to our expectations .

Speaker #8: So you know , maybe you can touch upon just price costs for both of those segments going into for Q and 2026 and how we should be thinking about that .

[Analyst]: Maybe you can touch upon price costs for both those segments going into Q4 and 2026 and how we should be thinking about that.

Speaker #4: Sure . John , let me start with your your your opening around the middle network . You know , first off , we're running in the in the low 90s .

Howard Coker: Sure, John. Let me start with your opening around the mill network. First off, we're running in the low 90s. We've been proactive and aggressive all along the way in terms of making sure we had a pretty balanced portfolio here. As it relates to Mexico, that's a mass decision as well as a capacity, I'll say control, but a capacity-oriented decision. It just makes better sense. The math says that 25,000 tons coming off of the mill across the border versus what we can do from a leverage perspective with much larger facilities here. Strictly a math equation. The price costs going forward, we'll see what happens. Very similar question to what George asked. It wouldn't surprise us to see OCC, hopefully, as noted, that markets are going to continue. That's what happens. If OCC starts going up, markets tighten up.

Speaker #4: And , you know , we've we've been , you know , proactive and aggressive all along the way in terms of making sure we were we had a pretty balanced portfolio here as it relates to Mexico .

Speaker #4: And that's a math decision as well as a capacity . Can say control . But the capacity oriented decision that it just makes better sense .

Speaker #4: I mean , the math says that 25,000 tons coming off of a mill across the board versus what we can do from a leverage perspective with much larger facilities here .

Speaker #4: So strictly a math equation , you know , price costs going forward , we'll see what happens . Very similar question to what George asked .

Speaker #4: I wouldn't surprise us to see OC , hopefully as , as as noted that markets are continue . And that's what happens if OC starts going up .

Speaker #4: Markets tighten up . That's a sign of markets tight and tightening up . And that price cost . There's two forms of that .

Howard Coker: That's a sign of markets tightening up and that price costs. There are two forms of that. One is contractual related to the indices, and the others are just good management of our cost side of the business as well. Are we going to know? We've got, it's a big quarter for us in industrial, and we expect that it's probably going to slip through the course of next year, but be at levels that are very consistent with the last three or four years, which is remarkably higher than the old Sonoco.

Speaker #4: One is contractual . Related to the indices and others are just good management of our cost side of the business as well . So are we going to .

Speaker #4: No I mean we've got it's a big quarter for us . And industrial . And we expect that it's probably going to going to slip through the course of next year .

Speaker #4: But be at levels that very consistent with the last 3 or 4 years , which is remarkably higher than the old Sunoco .

Speaker #5: Yeah . Okay , John , just to add , John , add one real quick question on the IRB mill closure there to this is really to get us to be maintaining an operation efficiencies in the 90s .

Paul Joachimczyk: Yeah.

[Analyst]: Hey, John, just to add one real quick question on the URB mill closure there too. This is really to get us to be maintaining an operation efficiency in the 90s. This is balancing overall portfolios. We started to see we had redundant capacity across the network and structure, and we wanted to make sure we maintain that because at that efficiency rate, we had to balance out logistics costs and everything else like that to make sure that the net transaction actually was a benefit for the overall company. Our goal is to maintain all of those facilities in the 90s, and we started to see the trend of it starting to be a little bit over capacity in the market space. Just to give you a little bit more context on that. Yes.

Speaker #5: So this is balancing overall portfolio . As we started to see we had redundant capacity across the network . And structure . And we wanted to make sure we maintained that because at that efficiency rate , we had to balance out logistics costs and everything else like that to make sure that the net transaction actually was a benefit for the overall company .

Speaker #5: But our goal is to maintain all of those facilities in the 90s , and we started to see the trend of it starting to be a little bit overcapacity in the market space .

Speaker #5: So just to give you a little bit more context on that , yes . And the total cost of the transaction after it is down , just to be clear on that .

[Analyst]: The total cost of the transaction after it is down, though, just to be clear on that.

Speaker #8: Okay . That's helpful . And then just a couple more questions on the bridge in 2026 that Gabe had touched upon earlier . I'm sure we'll get more more insights in in February .

[Analyst]: Okay. That's helpful. Just a couple more questions on the bridge in 2026 that Gabe had touched upon earlier. I'm sure we'll get more insights in February, but you know just thoughts around with the moving pieces in Sonoco Metal Packaging EMEA, what are you kind of expecting out of that $100 million or so synergy run rate by the end of next year? How should that be flowing through? In terms of apologies, I'll leave it there. Thank you.

Speaker #8: But , you know , just thoughts around with the with the moving pieces in , in SMP Emia what are you kind of expecting out of that 100 million or so synergy run rate by the end of next year ?

Speaker #8: How should that be flowing through ? And in terms of . Apologies , I'll leave it there . Thank you .

Speaker #5: Yeah . And John , you know , Roger mentioned too we're on track to getting the $100 million of synergies . And I want to stress by the end of 2026 , that would be the full run rate year to date .

Paul Joachimczyk: Yeah. John, you know Rodger had mentioned too, we're on track to getting the $100 million of synergies and I want to stress by the end of 2026, and that would be the full run rate. Year to date, we're kind of expecting you have a run rate of $40 million by the end of 2025. The goal would be to achieve that full run rate of $100 million. Now, you could say that's $60 million more run rate you have to go get. The timing of this, as you can imagine, in Europe, it does take longer to take those costs out and those stranded costs and other synergies that are out there. You could split the difference and say roughly $30 million will be actually realized in 2026, with the remainder coming into 2027 and beyond.

Speaker #5: We're kind of expecting to have a run rate of 40 million by the end of 25 . And the goal would be is to achieve that full run rate of 100 million .

Speaker #5: Now , you could say that's a 60 million more run rate . You have to go get . And then timing of this , as you can imagine in Europe , it does take longer to take those costs out .

Speaker #5: And those stranded costs and other synergies that are out there . So you could split the difference and say roughly $30 million will be actually realized in 2026 , with the remainder coming into 27 and beyond .

Speaker #8: Very helpful . Thank you .

[Analyst]: Very helpful. Thank you.

Speaker #2: Your next question comes from the line of Anthony Pettinari with Citi . Your line is open .

Operator: Your next question comes from the line of Anthony Petinari with Citi. Your line is open.

Speaker #9: Good morning . You talked about hey , you talked about potential re-acceleration in RPC , which I guess is down low single digits in three Q and is expected to be down that much in four Q in terms of the Re-acceleration .

[Analyst]: Good morning.

Howard Coker: Morning.

[Analyst]: You talked about potential reacceleration in RPC, which I guess is down low single digits in Q3 and is expected to be down that much in Q4. In terms of the reacceleration, is that just a large customer getting to kind of a deal completion, or are there new projects that are in the pipeline, or are you seeing anything in terms of inventories? I just wonder if you could give any more detail in terms of what drives that inflection, and is that something maybe we see in the first quarter, the first half of 2026, or any further detail there?

Speaker #9: Is that just , you know , a large customer getting to kind of a deal completion , or are there new projects that are in the pipeline , or are you seeing anything in terms of inventories ?

Speaker #9: I just wondering if you could give any more detail in terms of what drives that inflection , and is that something maybe we see in the first quarter or the first half of 26 , or any further detail ?

Speaker #9: There ?

Speaker #4: Yeah , Anthony , the easy answer to that is all of the above . What I would tell you is that the reseller nation , if that's a word reseller of of of our snack .

Howard Coker: Yeah. Anthony, the easy answer to that is all of the above. What I would tell you is that the reacceleration, if that's a word, reacceleration of our SNAC business is a foot on the gas pedal type thing that really is impactful immediately if and when it happens. The expectation that it will happen, and that's a global phenomenon for us. We're continuing to win as it relates to all-paper solutions in Europe. We're adding those capabilities to the U.S. Those are more incremental. They build as big as the businesses. You win $50 million units. It's rounding error, but over time, and what we're seeing is a trajectory in that direction that will continue to build momentum throughout.

Speaker #4: Business is , you know , that's a , that's a foot on foot on the , the gas pedal type thing that really is impactful .

Speaker #4: Immediately if and when it happens , I expect expectation it will happen . And that's a global phenomenon for us . We're continuing to win as it relates to all paper solutions in Europe .

Speaker #4: We're adding those capabilities to the US . Those are more incremental . They build as big as the business is . You you win 50 million units , doesn't really .

Speaker #4: It's rounding error . But over time it and what we're seeing is a trajectory in that , in that direction that will continue to build momentum throughout .

Speaker #4: So I'd suggest to you that , you know , we're really bullish about the paper can side of the business . And then you start adding that to the synergies that are associated with the metal side .

Howard Coker: I'd suggest to you that we're really bullish about the paper can side of the business, and then you start adding that to the synergies that are associated with the metal side. We're looking forward to next year and then on into the next coming years with what these businesses can do.

Speaker #4: We're looking forward to next year . And and on into the next coming years with what , what what these businesses can do .

Speaker #9: Okay , that's helpful . And then just switching gears to , you know , capital allocation , you know , you talked about getting leverage down to 3.4 times by year end .

[Analyst]: Okay. That's helpful. Just switching gears to capital allocation, you talked about getting leveraged down to 3.4 times by year-end, debt pay down next year. I'm wondering if you could talk a little bit more about the capacity for share repurchases in terms of when you'd be able to really buy back at scale in terms of timing or leverage threshold, or is there an opportunity to maybe pull that forward given the valuation of the stock? I guess related question, the $100 million run-rate synergies that you're going to get in 2026, is there a cash cost associated with that that we should think about when we think about that 2026 cash bridge?

Speaker #9: Debt pay down next year . I'm wondering if you could talk a little bit more about , you . The capacity for share repurchases in terms of when you'd be able to really buy back at scale in terms of , you know , timing or leverage threshold , or is there , you know , an opportunity to maybe pull that forward , given the valuation of the stock ?

Speaker #9: And then I guess , related question , the 100 million run rate synergies that you're going to get in 26 , is there a cash cost associated with that , that we should think about ?

Speaker #9: When we think about that $26 cash bridge?

Speaker #5: Yeah , Anthony , I'll start with the I'll call it the capital allocations . And that strategy , we were really lay out in our February meeting .

Paul Joachimczyk: Yeah. Anthony, I'll start with the, I'll call it the capital allocation. That strategy we will really lay out in our February meeting. What I want to reiterate too is we are committed to, as an organization, getting our debt structure down. We talked about on our last call getting our debt leverage ratio to, you know, three. We're

Speaker #5: But I want to reiterate to you is we are committed to as as an organization to getting our debt structure down . We talked about our last call , getting our debt leverage ratio to , you know , 3 to 3.3 by the end of 26 , you can see we'll be at three four by the end of this year .

Operator: At 3.3 by the end of 2026, you can see we'll be at 3.4 by the end of this year. A very strong performance. Once we are at that level, it does offer us the optionality to go do things like share repurchase and other activities. Debt in the near term is going to be our primary capital allocation strategy that's out there. I'm not kind of delaying the question, but I really want to wait for that roadmap in February to give you the full capital allocation story that's out there. Now, the $100 million of synergies and cost outs, we have put in a significant amount of money in restructuring charges already to date. We will have to allocate some capital to that in 2026. That amount has not been released and we haven't disclosed that.

Speaker #5: So very strong performance . Once we are at that level . It does offer us the optionality to go do things like share repurchase and other activities , but debt in the near term is going to be our primary capital allocation strategy .

Speaker #5: That's out there . And and , you know , I'm not kind of delaying the question , but I really want to wait for that roadmap in February to give you the full capital allocation story that's out there .

Speaker #5: Now , the $100 million of synergies and cost outs we have put in a significant amount of money of in restructuring charges already to date .

Speaker #5: We will have to allocate some capital to that in 26 . That amount has not been released and we haven't disclosed that . But I will say there will be capital allocated towards that as a priority to hit those synergies and run rate .

Operator: I will say there will be capital definitely allocated towards that as a priority to hit those synergies and run rate.

Speaker #9: Okay . That's helpful . I'll turn it over .

Roger Schrum: Okay, that's helpful. I'll turn it over.

Speaker #2: Your next question comes from the line of Mike Rockland with Truist Securities. Your line is open.

Howard Coker: Your next question comes from the line of Michael Roxland with Truist Securities. Your line is open.

Speaker #10: Yeah . Thank you . Howard . Rodger , Paul and Roger for taking my questions . And congrats on all the progress . I just wanted to follow up on on Europe again .

Roger Schrum: Thank you, Howard, Rodger, Paul, and Rodger for taking my questions. Congrats on all the progress. I just wanted to follow up on Europe again. Can you give us some more color on the S&P and the cost savings that you're looking to achieve? It seems like the business is facing headwinds that you think are structural given the cost actions you're pursuing and the end market realignments. Any additional clarity you could provide on the cost that you've taken to take out dollar-wise and whether you think there's been a structural shift in EMEA relative to your initial expectations?

Speaker #10: And can you give us some more color on EMEA , S&P , EMEA and the cost savings that you're you're looking to achieve ?

Speaker #10: You know , it seems like the business is facing headwinds that you think are structural given the cost actions you're pursuing and the end market realignments .

Speaker #10: Any additional color you can , you can provide on the cost of your take out dollar wise and whether you think there's been a structural shift in EMEA relative to your initial expectations .

Speaker #3: Yeah . Mike , thanks . As Roger . Yeah , I think if you look at what we've actioned , first of all , you've got the synergies that Paul just talked about .

Rodger Fuller: Yeah, Mike. Thanks. This is Rodger. Yeah. I think if you look at what we've actioned, first of all, you've got the synergies that Paul just talked about, so I won't repeat that. Then you've got the incremental cost outs that we're actioning now as a result of learnings that we've had in the marketplace. Typically, and we'll share more numbers in February, we're getting one-year returns on these cost outs. Whether it's footprint consolidation or actually going in and taking out costs to match the volumes that we see in places like Africa, we're getting a full one-year return. If you look at the base business in Europe, the Europe-based business, we're really just advancing plans that the business had in place, going around the middle ends and consolidating our middle end production in low-cost facilities.

Speaker #3: So I won't repeat that . Then you've got the incremental cost outs that were actioning . Now as a result of learning learnings that we've had in the marketplace , you know , typically and we'll share the more numbers in February .

Speaker #3: But typically we're getting one year returns on these cost outs . So whether it's footprint consolidation , whether it's actually going in and taking out cost to match the volumes that we see in places like Africa , you know , we're we're getting a full one year , full one year return .

Speaker #3: And you know , it's not if you look at the base business , you know , in Europe , the Europe based business , you know , we're really just advancing plans that the business had in place .

Speaker #3: Again , going around the metal ends and consolidating our metal end production and low cost facilities . And we're actually adding some plants , some capability in Eastern Europe where we see the growth in products like fish and pet food .

Rodger Fuller: We're actually adding some plants, some capability in Eastern Europe where we see the growth in products like fish and pet foods. It really is a balance. What we found is, back to Africa, if you look at our small plant in Thailand, if you look at what we have in Turkey with inflation concerns, those outlying areas are where we're really targeting getting some pretty significant cost out to match the volumes that we have today and make sure they have the profitability that we see in our base business in Europe. There's nothing I would say that's extraordinarily different than what we went into the plan with. The rationale, strategic rationale around the acquisition is still solid. Service quality leader in the organization, strong operational team.

Speaker #3: So it really is a balance . You know what we found is again , back to Africa , if you look at our small plant in Thailand , if you look at what we have in Turkey with inflation concerns , those outlying areas where we're really targeting getting some pretty significant cost out to match the volumes that we have today .

Speaker #3: And make sure they they have the profitability that we see in our base business in Europe . So , you know , there's nothing I would say that's extraordinary different than what we went into the plan with , you know , the rationale .

Speaker #3: Rationale , strategic rationale around the acquisition . This is still solid service quality leader in the organization , strong operational team . You know , frankly , as we look at next year where we're focusing , and I mentioned in my opening comments is around our commercial capability and commercial excellence .

Rodger Fuller: Frankly, as we look at next year where we're focusing, and I mentioned in my opening comments, is around our commercial capability and commercial excellence. We're building out our talent and our regional sales team. We've added talent in France and Italy and Germany. Towards the end of the year, we're going to have a new commercial leader coming into the organization. I'm really excited about that. As you get into all areas of commercial excellence, price cost, a real disciplined approach to share gain in the marketplace, that's where we're focusing our time. I think that's really what will drive our improvement that we're targeting in 2026.

Speaker #3: You know , we're building out our talent and our regional sales team . We've added talent in France and Italy and Germany . And as towards the end of the year , we're going to have a new commercial leader coming into the organization .

Speaker #3: So , you know , I'm really excited about that . So as you get into all areas of commercial excellence , price , cost , real disciplined approach to to share gain in the marketplace , so on and so on .

Speaker #3: That's where we're focusing our time, and I think that's really what will drive our improvement that we're targeting in 2026.

Speaker #10: Thank you . How much you know from your being involved in the business as closely as you are , how much of the weakness that you're seeing in EMEA relates to end markets versus commercial capabilities ?

Roger Schrum: Thank you, Rodger. How much, you know from your being involved in the business as closely as you are, how much of the weakness that you're seeing in EMEA relates to end markets versus commercial capabilities and maybe not having the talent in the right seats at present?

Speaker #10: And maybe not having the talent in the right seats at present ?

Speaker #3: No , I think it's no , I don't see that . I think my when I get into those type of comments longer term , I think certainly it's going to help us .

Rodger Fuller: No, I don't see that. When I get into those types of comments, longer term, I think certainly it's going to help us. We've got some exciting growth projects that are going to hit in 2026. For me, it's about recovering all forms of inflation. Again, back to that disciplined process to go to market to win share. What we've seen this year, the surprises we've seen this year, I hate to repeat myself, is around things like sardines in Africa and some of the business that we've seen in Turkey being reduced as a result of really high inflation levels. No, I don't think this volume-wise, I think the year played out exactly how it was going to play out. It had nothing to do with commercial capability because we've got wins coming.

Speaker #3: We've got some exciting growth projects that are going to hit in 2026 . For me , it's about recovering all forms of inflation .

Speaker #3: Again , back to that discipline process to go to market to to win share . So you know what we've seen this year , the surprises we've seen this year I hate to repeat myself is around things like sardines in in Africa is some of the business that we've seen in Turkey that go be reduced as a result of really high inflation levels .

Speaker #3: So, no, I don't think this volume-wise. I think the year played out exactly how this was going to play out. It had nothing to do with commercial capability, because we've got winds coming.

Speaker #3: For me, it's more about that value-add—getting paid to be the service quality and technical service leader in the market. We need to ensure we're getting paid for the value we're bringing into the marketplace.

Rodger Fuller: For me, it's more around that value add, getting paid to be the service quality, technical service leader in the market. Make sure we're getting paid for the value we're taking into the marketplace. The unexpected volume drops, we talked about the reasons for those. Now they're included in our fourth quarter guidance. We'll talk about more of that in February, how we see it for 2026.

Speaker #3: The volume , the unexpected volume drops . Really . We talked about the reasons for those and and now they're included in our fourth quarter guidance .

Speaker #3: And we'll talk about more of that in February . How we see it for 2026 .

Speaker #10: Got it . And just one quick follow up . Can you just help us frame the procurement benefits ? The expected to receive next year from integrating both US and EMEA steel procurement teams into a single , globally focused organization ?

Roger Schrum: Got it. Just one quick follow-up. Can you help us frame the procurement benefits that you expect to receive next year from integrating both U.S. and EMEA steel procurement teams into a single globally focused organization? I think the company originally mentioned $20 million from reducing support functions. Is that still what you're looking to achieve? Is there any upside to that? Any color would be helpful. Thank you.

Speaker #10: I think you originally the company originally mentioned $20 million from reducing support functions . Is that still what you're looking to achieve ? Is there any upside to that ?

Speaker #10: Any color would be helpful . Thank you .

Speaker #3: Yeah , that yeah . From a procurement we said from the very beginning that procurement savings of 100 million synergies would be about 60% .

Rodger Fuller: Yeah, from the procurements, we said from the very beginning that procurement savings of the $100 million synergies would be about 60%. We said $20 million will come from synergies around support functions. That's still a really good number. You know what Howard's been talking about and Paul's mentioned before as far as future restructuring, that would be on top of that. You're right. The numbers you call out are exactly right. Procurement's about $60 million of the full $100 million run rate, and other support cost is about $20 million. The final $20 million is supplying ends to our paper can business that we had not supplied before and other one-off moves that we're making. Again, we're fully confident we can get that $100 million run rate by the end of 2026.

Speaker #3: We said $20 million will come from synergies around support functions. That's still a really good number. You know what Howard's been talking about.

Speaker #3: Paul's mentioned before as far as future restructuring . That would be on top of that . But you're right . Those the numbers you called out are exactly right .

Speaker #3: Procurement is about 60 million of the full 100 million run rate . And other support costs is about 20 million . And then final 20 million is supplying ends to our paper cam business that we have not supplied before .

Speaker #3: And other one-off moves that we're making. And again, we're fully confident we can get that $100 million run rate by the end of 2026.

Speaker #4: Yeah , I think , Mike , your comment related to mine about the 20 million that we've we've stranded costs that we've taken out through the course of this year that that's going to be rolling into next year .

Paul Joachimczyk: Yeah, I think, Mike, your comment related to mine about the $20 million that we've banded costs that we've taken out through the course of this year, that's going to be rolling into next year. What I alluded to was that we're on the cusp of looking at even more opportunities corporately. I think it's corporate as well as operationally that we'll be talking about as we go into next year.

Speaker #4: And then what I alluded to was that we we're on the cusp of looking at other , even even more opportunities corporately . I say , well , it's corporate as well as operationally that that we'll be talking about as we go into next year .

Speaker #10: Got it . Thank you very much .

Roger Schrum: Got it. Thank you very much.

Speaker #2: Your next question comes from the line of Ghansham Panjabi with Baird. Your line is open.

Howard Coker: Your next question comes from the line of Ghansham Panjabi with Baird. Your line is open.

Speaker #11: Hey , guys . Good morning . You know , just given that there's so many moving parts , you know , with your portfolio , etc.

[Analyst]: Hey, guys. Good morning. Just given that there's so many moving parts with your portfolio, etc., Howard, if you just zoom out a bit and kind of think about the end markets, how are you thinking about the operating environment for both consumer and industrial as you look ahead to both Q4 and the early part of 2026? I'm just asking as it relates to the trend line from what we've seen in consumer and in the industrial markets over the last few quarters. Is there any inflection or is it just more of the same at this point?

Speaker #11: . Howard , if you if you just zoom out a bit and kind of think about the end markets , how are you thinking the operating environment for both consumer and industrial , as you look ahead to both forecast and the early part of 2026 ?

Speaker #11: And I'm just asking as it relates to the trend line , from what we've seen , in consumer and and the industrial markets over the last few quarters , is it is there any inflection or is it just more of the same at this point ?

Speaker #4: Yeah . First , appreciate the comments about all the moving pieces . I get it . You know , we we've been busy for the last five years setting the portfolio in place that we have today .

Paul Joachimczyk: Yeah, first, Gancham, appreciate the comments about all the moving pieces. I get it. We've been busy for the last five years setting the portfolio in place that we have today. I just want to kind of put a stake in the ground and say that's done. This is the first quarter, being the third quarter, where you're actually able to look at the go-forward consumer business, which is nothing but cans. Industrial is what it is. On the consumers, what's happening at this point in time and into 2026, I'd say I don't see a real stimulus across the globe at this point in time. We've spent most of this call talking about EMEA. I talked about the consumer side as it related to, certainly, Rodger, as it related to the metal, but the paper can volumes are actually okay right now.

Speaker #4: I just want to kind of put a stake in the ground and say , that's done . So this is the first quarter of being the third quarter where you're actually able to look at the go forward consumer business , which is nothing but cans .

Speaker #4: Industrial is is what it is . You know , on the consumer , you know , what's happening at this point in time .

Speaker #4: And into 2026 . I'd say , you know , I don't see a real stimulus , you know , across the the globe at this point in time , we've spent the most of this call talking about EMEA .

Speaker #4: And I talked about the consumer side as it related to certainly , Roger , as it related to the metal . But paper can paper can volumes are actually okay right now , you know , flattish .

Paul Joachimczyk: Flattish to last year, but that's with the impact of one discrete customer that I think we all understand. I'm not looking—we're not looking for, we're not planning on to see some great resurgence in terms of consumer volumes going forward. Typically, if macroeconomics, and I say typically, it's actually factual, we went back and looked at slowdowns in the macro, we win on the consumer side. The consumer is spending more in the supermarkets than they are in the restaurants. We'll see how that plays out. Industrial, just in North America, just kind of flattish quarter over quarter. I don't think you'll see us expecting that to materially improve either as we go into next year based on what we see at this point in time.

Speaker #4: Last year . But that's with the impact of of one discrete customer that I , that I think we all understand . So I'm not looking we're not looking for we're not planning on to see some great resurgence in terms of consumer volumes going forward .

Speaker #4: Typically if macro economics and I say typically it's actually factual , we went back and looked at at slowdowns in the macro . We win on the consumer side , spend the consumer spending more in the supermarkets than they are in the in the restaurants .

Speaker #4: So we'll see how that plays out . Industrial just , you know , in North America , you know , just kind of flattish quarter over quarter .

Speaker #4: And I don't think you'll see us expecting that to to to materially improve either as we go into next year based on what we see at this point in time , Europe , as we talked about EMEA and we look at fourth quarter and the forecast .

Paul Joachimczyk: Europe, as we talked about EMEA, and we look at fourth quarter and the forecast, we came out of the August holiday season there. Typically, in our industrial business, we see a pretty good lift as we get into September, falling off as we get to the latter part of the fourth. We didn't see that lift in September. There are definitely signs that things aren't great. Additionally, that's been a good thing on the consumer side of the business because people are shopping in the markets more, but too soon to call at this point in time.

Speaker #4: Yeah, we came out of the August holiday season there, and typically in our industrial business, we see a pretty good lift as we get into September.

Speaker #4: Well , in off as we get to the latter part of the fourth , we didn't see that lift . So there is in September that so there is definitely signs that things aren't aren't great .

Speaker #4: And again , traditionally that's been a good thing on the consumer side of the business because people are are shopping in in the markets more .

Speaker #4: But to send a call at this point in time .

Speaker #11: Okay , thanks for that , Howard . And then in terms of the industrial , you know , margin expansion of 380 basis points year over year for the third quarter , was there was there anything unique that boosted the quarter ?

[Analyst]: Okay. Thanks for that, Howard. In terms of the industrial, you know, margin expansion of 380 basis points year over year for the third quarter, was there anything unique that boosted the quarter? It seems like margins were quite a bit higher than the trend line over the previous quarters, just given the price cost flip that has benefited. Just more color on that would be great. Thank you.

Speaker #11: I mean, you know, it seems like margins were quite a bit higher than the trend line over the previous quarter, just given the price.

Speaker #11: Price, cost—flip that. That has benefited just... just more color on that would be great. Thank you.

Speaker #4: Yeah . Price . Cost is certainly , certainly a part of it . And I want to take you back in time . Our margins and our in our industrial business .

Paul Joachimczyk: Yeah. Price cost is certainly a part of it. I want to take you back in time. Our margins in our industrial business, if you go back to way back to Project Horizon to where we are today with our refocus of saying we are the world's number one in URV and converted URV products, let's behave that way. The capitals that we started putting in four and five years ago have continued to drive improved margins. Obviously, exceptional for this quarter and price cost is part of that. I'd be remiss if I didn't say that, as an example, our North American team has completely restructured how they manage the business, how they look, how they view the business. What I'm saying is we no longer here have a paper division and a converting division. They're all one.

Speaker #4: If you go back to way back to Project Horizon , to where we are today with our refocus of saying we are the world's number one and you are and converted Erb products with lots of behave that way .

Speaker #4: So the capitals that we started putting in four and five years ago have continued to drive improved margins . Obviously exceptional for this quarter and price cost as part of that .

Speaker #4: But I'd be remiss if I didn't say that example . Our North American team has completely restructured how they manage the business . They look , how they view the business , and what I'm saying is we no longer are here , have a paper division and a converting division .

Speaker #4: They're all one and it has created a powerful new , new viewpoint in terms of how we are optimizing our supply chain between the paper mills and the converting operations .

Paul Joachimczyk: It has created a powerful new viewpoint in terms of how we are optimizing our supply chain between the paper mills and the converting operations. It's driven cost out. There's some stickiness to the improved margins, but certainly, price cost is going to be a part that ebbs and flows. I'm very, very proud of this team to be able to say that five years ago, if I told you guys we were operating in the 16%, 17%, 18% type margin range, you would ask the same question, "When is it going to drop down to 13%?

Speaker #4: It's driven cost out . So there's some stickiness to the improved margins . But certainly price cost is going to be a part that ebbs and flows .

Speaker #4: But I'm , you know , very , very proud of this team and be able to say that five years ago , if I told you guys we were operating in the 16 , 17 , 18% type margin range , you would ask the same question , when's it going to drop down to 13 ?

Speaker #11: Very impressive . Thank you .

[Analyst]: Very impressive. Thank you.

Speaker #4: Yep .

Paul Joachimczyk: Yep.

Speaker #2: Your next question comes from the line of Mark Weintraub with Research Partners . Your line is open .

Howard Coker: Your next question comes from the line of Mark Weintraub with Seaport Research Partners. Your line is open.

Speaker #12: Thank you . A few quick follow

[Analyst]: Thank you. A few quick follow-ups. One on the synergies or really actually the purchasing synergies. I remember last year, the deal closed a bit late, and you didn't end up getting them in 2025. I would have thought you would have gotten most of that $60 million in 2026. The way you talked about maybe like $30 million in total for synergies, it seems like that might not be correct. Can you explain why the purchasing synergies and how much have already come and why more of it wouldn't come quickly in 2026?

Speaker #12: ups . One on the synergies or really actually the purchasing synergies . I remember last year the deal closed a bit late . And so you didn't end up getting Seaport them in 2025 .

Speaker #12: I would have thought you would have gotten most of that $60 million in 2026. But the way you talked about maybe like $30 million in total for synergies, it seems like that might not be correct.

Speaker #12: Can you explain why that purchasing synergies , how much have already come and why more of it wouldn't come quickly in 2026 ?

Speaker #5: Yeah , Mark , that's a great question . And if you think about the cycle of the sales as they come through throughout the whole year , the procurement is 60% of the overall savings .

Operator: Yeah, Mark, it's a great question. If you think about the cycle of the sales as they come through throughout the whole year, the procurement is 60% of the overall savings. We did realize a portion of procurement in 2025. It won't be a full $60 million of savings and additional incremental in 2026. That's why I'm kind of, and I gave you a midpoint of it to be conservative. We'll give you that real strong clarity in that February 2026 of the outlook of the full synergies and the roadmap that's out there. The $30 million is a conservative approach.

Speaker #5: We did realize a portion of procurement in 2025 , so it won't be a full 60 million of savings . That additional incremental in 26 .

Speaker #5: So that's why , you know , I'm kind of and I gave you a midpoint of it to be conservative . And we'll give you that real strong clarity in that February 26th of the outlook of the full synergies and the roadmap that's out there .

Speaker #5: But the $30 million is a conservative approach.

Speaker #3: And Mark , remember , we're not just talking people immediately go to tinplate , but we're talking about all purchasing . So compounds coatings indirect freight and the like .

Paul Joachimczyk: Mark, remember, we're not just talking people immediately go to tin plate, but we're talking about all purchasing. Compounds, coatings, indirect freight, and the like. Many of those, we were able to start realizing some synergies this year.

Speaker #3: So many of those we we were able to start realizing some synergies . This year .

Speaker #12: Okay . And second congratulations I think I think you say it's an all an all time record quarter . Your your stock doesn't seem to be reflecting the really strong financial performance .

[Analyst]: Okay. Congratulations. I think it was a, I think you say it's an all-time record quarter. Your stock doesn't seem to be reflecting the really strong financial performance. I guess I was a little surprised that I didn't sense a more clear-cut communication on the share repurchase opportunity. I mean, I think buying back stock, just the cash benefit of not paying out the dividend is probably after-tax even higher than your after-tax interest expense. I was just wondering, is that a function of like debt maturities that you have to be conscious of? Why not kind of a more, this is a, you know, terrific opportunity to take advantage of what's a mispriced stock given the financial performance that you're putting up and think you're going to continue to achieve?

Speaker #12: I guess there's a little surprised that I didn't sense a more clear cut communication on the the share repurchase opportunity . I mean , I think buying back stock just the cash benefit of not paying out the dividend is probably after tax even higher than than your after tax interest expense .

Speaker #12: And and I was just wondering , is that a function of like debt maturities that you have to be conscious of or why not kind of a more .

Speaker #12: This is a terrific opportunity to take advantage of what's mispriced stock given the financial performance you're putting up and think you're going to continue to achieve .

Speaker #4: Thanks , Mark . What I say is certainly stock buybacks are in the mix , but we're also looking at you know , we talk about options , one of which is obviously stock buybacks .

Paul Joachimczyk: Thanks. Mark, what I'd say is certainly stock buybacks are in the mix, but we're also looking at, you know, we talk about options, one of which is obviously stock buybacks, a more aggressively payback down debt. The third being capital reinvestments into the business and restructurings. We're balancing those. That's our decision tree, if you will, and which one is going to offer the longest-term payback to our shareholders, to our owners. We've talked about the restructuring, the things that are really coming to light today. I talked about very chunky business wins and opportunities that we're looking at that are going to require, in some cases, fairly significant capital. We're taking the approach that at this point in time, let's stay on the path. Let's continue to pay our debt down. Let's bind these opportunities.

Speaker #4: More aggressively . Payback down debt at the and the third being capital reinvestment into the business . And restructurings . And so we're we're we're balancing that's our decision tree if you will .

Speaker #4: And which one is going to offer the longest term payback to our to our shareholders , to our owners . So we've again we've talked about the the restructuring that that things that we're that are really coming to light today .

Speaker #4: I talked about very chunky business wins and opportunities that we're looking at that are going to require, in some cases, fairly significant capital.

Speaker #4: So we're taking the approach that at this point in time , let's stay on the path . Let's continue to pay our debt down .

Speaker #4: Let's bind these opportunities . And at the right point in time , we look and say , we've got this capital project . We can buy back shares .

Paul Joachimczyk: At the right point in time, we look and say, "We've got this capital project. We can buy back shares. We can do this restructuring and still maintain the debt type levels that we think our shareholders expect of us and make that right decision at that time.

Speaker #4: We can do this restructuring . And still maintain the debt type levels that we think our shareholders expect of us and make that right decision at that time .

Speaker #12: Okay . I appreciate it . Thank you .

[Analyst]: Okay. Appreciate it, Howard. Thank you.

Speaker #2: Your next question comes from the line of Matt Roberts with Raymond James . Your line is open .

Howard Coker: Your next question comes from the line of Matt Roberts with Raymond James. Your line is open.

Speaker #13: Good morning. A follow-up to Anthony's question earlier on RPC. Are there any indications on when new international capacity, specifically in Thailand, will begin to ramp up?

[Analyst]: Good morning. Following Anthony's question earlier on RPC, any indications on when new international capacity, specifically Thailand, will begin to ramp? How many points of incremental volume is expected from that? Is customer merger timeline still a drag into 2026 and potentially delaying any benefit there?

Speaker #13: How many points of incremental volume is expected from that ? Or is customer merger timeline still a drag into 2026 and potentially delaying any benefit ?

Speaker #13: There ?

Speaker #4: Yeah . So we're we're ramping ramping up . We we are starting up as we speak . So first , first lines up and running going through qualifications with the customer .

Paul Joachimczyk: Yeah. We're ramping up. We are starting up as we speak. First line is up and running, going through qualifications with the customers. Things are moving forward. You know what I'll tell you is it was, when first presented to us, and we've mentioned it to you guys, the intent is this would be the world's largest paper can facility in the market. We've got to see this transaction close. The expectation would be that that would remain the objective. At this point in time, we're just kind of starting up and on hold. We've got a new facility that's ramping up pretty aggressively in Mexico, and we've got capacity additions that are fully ramping up right now in Brazil. Matt, I wish I could, I wish I knew. You know it's all quiet right now until things clear their processes.

Speaker #4: So things are moving forward . You know what I'll tell you . Is it was when when first presented to us . And we've mentioned it to you guys .

Speaker #4: The intent is this would be the world's largest paper . Can facility . Come being in the market . So . We've got you know , we've got to see this transaction closed .

Speaker #4: The expectation would be that that would be remain remain the objective . But at this point in time , we we we're just kind of starting up and on hold .

Speaker #4: So we've got a new facility that's ramping up pretty aggressively and in Mexico . And we've got capacity additions that are fully ramping up right now .

Speaker #4: And Brazil . So man , I wish I could I wish I knew , you know , it's all quiet right now until till things .

Speaker #4: Clear, clear through their processes.

Speaker #13: Howard . Second . You mentioned investments in pet and seafood in Europe . What is the timing of when those come online ? Any CapEx consideration next year ?

[Analyst]: Howard, second, you mentioned investments in pet and seafood in Europe. What is the timing of when those come online? Any CapEx considerations next year? Relatedly, what is the mix of these categories expected to be versus what it is now? How do the margins compare to the system average for metal packaging in the EU? Thanks again for taking the questions.

Speaker #13: And relatedly , what is the mix of these categories expected to be versus what it is now ? And how do the margins compare to this system ?

Speaker #13: Average for metal packaging ? Yeah . Thanks again for taking the questions .

Speaker #3: Yeah . Matt . Yeah , capital would be in process as we speak . And that'll run into the into the first quarter of next year .

Operator: Yeah, Matt. The capital would be in process as we speak, and that'll run into the first quarter of next year. You're looking at growth coming really probably starting the second quarter of next year. If you look at fish and seafood and pet, they're both today about 15% to 17% share of our overall market. Pets are really a mover. We see it going to 20% and the same for seafood. Pretty nice gains in both those markets. Again, the whole idea being our seasonal business is very good businesses, but it's very seasonal. It's really to spread out and better leverage our operations. As far as EBITDA margins in that business, pretty much average. We approached 18% in the quarter. I'd say it's maybe slightly better than some of our average margins.

Speaker #3: So you're looking at growth coming really probably starting this second quarter of next year . You know if you look at fish and seafood , seafood and pet , they're both today about 15 to 17% share of our overall market .

Speaker #3: Pets are really mover . You know we see it going to 20% in the same for seafood . So pretty you know nice gains in both those markets .

Speaker #3: Again with the whole idea being our seasonal business is very good . Businesses . But it's very seasonal . So it's really to spread out and better leverage our operations as far as EBITDA margins on that business , pretty much average , you know , we're approached 18% in the quarter .

Speaker #3: So , you know , I'd say it's maybe slightly better than some of our average margins . But with the incremental investments that will be ramping up , starting , let's call it beginning of second quarter next year .

Operator: With the incremental investments, it'll be ramping up starting what's called the beginning of the second quarter next year.

Speaker #2: That concludes our question and answer session . I will now turn the call back over to Roger Schrum for closing remarks .

Howard Coker: That concludes our question and answer session. I will now turn the call back over to Roger Schrum for closing remarks.

Speaker #3: Again , I want to thank everybody for joining us today . And do please save the date for our February 17th New York Investor Day , and we'll be providing you more information on that in the future .

Roger Schrum: Again, I want to thank everybody for joining us today. Please save the date for our February 17, 2026, New York Investor Day. We'll be providing you more information on that in the future. Thank you again for your attention.

Speaker #3: Thank you again for your attention .

Howard Coker: This concludes today's conference call. Thank you for your participation. You may now disconnect.