SON - Earnings call transcript Q4 2018 | Sonoco Products Company

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Sonoco Earnings Conference Call. [Operator Instructions].

As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Roger Schrum, Vice President of Investor Relations. Please go ahead.

Roger Schrum

Jonathan. you, Thank welcome our and results. investor call conference Good fourth to quarter discuss XXXX financial and to morning, Sonoco's full year

sonoco.com. Joining Relations reporting President opened available Tiede, Barry me President, the Treasurer and Rob market Chief A Vice website results today Officer; news in were CFO-elect. Executive before release Julie President Albrecht, is Saunders, financial Chief the today and and Vice at and and Investor Financial our Officer; Senior are issued

we that posted quarter our reference addition, results, which website fourth In on our will presentation morning. was in also this

we you and materially. estimates company's as performance Furthermore, and subject use to presentation Relations of statements closely on operations. and Before measures, differ not measure, projections. management let uncertainties. those company's GAAP further, to of use definitions of condition the non-GAAP on and are Therefore, based go are me future and to today's non-GAAP information forward-looking which believes of risks number the may to a remind Investor today's measures available information of certain the is related Further section well as These financial the useful call of measures, website. results including our expectations, financial also includes provides actual current presentation statements contains about about results reconciliations financial investors most the of guarantees

turn Now to let me it Barry. over

Robert Tiede

and last New per X, Day earnings on per base to share on of which $X.XX compares reported will share, of Slide I for can period we as is of fourth Roger. year. base provided you, Thank near basis guidance $X.XX of the on $X.XX, of York $X.XX same to our $X.XX this a morning, share the you all Analyst earlier of earnings see begin where earnings that high-end in our GAAP quarter per this

our the for of GAAP acquisition-related a in we $X.XX will valuation in rate effective offset favorable and some unexpected mostly reconciling businesses. than are As per interpretation weakness U.S. tax $X.XX share, allowances charges some lower-than-expected a items including tax from quarter, a several just foreign of of see few $XX of Jobs of which restructuring impact $X.XX moment, share, a share Tax There in tax December adjustments on of had earnings, per net last more you base a Act. further with and per cost million Most notably, Cuts credits. release year's and between

the on the line. Looking briefly top at with starting next base income statement slide our

over bridge, the positive business insurance acquisitions by factors, year see from $X,XXX,XXX,XXX, sales due the items profit $XX.X $XXX.X see of the were the by inflation. Highland in you'll and many up pieces year-over-year but the million and were several prior above recovery driven million due other administrative including $X.X million, general You $XXX Selling, largely to million $XX.X the the of price/cost, acquisitions. really the is sales and unfavorable expense interruption impact income to acquisitions driven was by increase the and moving million, third and and Conitex net prior normal Gross in year that the quarter. flood

tax Interest slightly effective year even profit of the earnings, from All bridge on the Income primarily drivers in for XXXX. the though pretax million, of to $XX.X the base of prior you'll taxes notably profit lower in quarter $XXX.X quarter prior quarter of expense as rate year, the than to operating than resulting interest earnings $XXX,XXX, operating higher the you in the this higher pension in XXXX. to base million lower of million quarter, were and the was all to profit, a just which of operating see $X.X million which $X on profits due an in rates. $XX.X impact down million year the same expense prior of the see of compared fourth were essentially change Below the compares XX.X% XX.X% of unchanged the nonservice for nonservice moment. was due only only

market the segments But in overall X.X% Consumer core the the most segment segment was more interest or U.S. a impact ending In the minority affiliates essentially as looking a with across just X.X% bridge In $XX.X quarter. driven the global road, base thus tube volume and for was over you in volume The in excluding offset and and flat. benefit Europe. component rate in Packaging, Consumer exiting more flexibles, associated but Tax we a right Solutions on decrease by volume Converted company X% reduction on down in can see million was the Industrial at increase volume the when softness, sales volume the Converted Canada the by the year-to-date combined in the infamous about recognized essentially share. and base Products quarter year-to-date by X% flat expected at Western volume, up impact bringing year-over-year to in X.X% Packaging market the at and was center. segment. than notably effective decline the plastics in over such To there year-over-year to X, for and with was And in million, segment, really, reduced guilty guidance regions and composite earnings volume the million Act, was of Protective $XX had that Tax where issued the lower the of in right $X.X quarter $X.X addition served X%. million, of or some Paper Packaging In Products pack further of details provide was Act, X% in Industrial Atlanta Equity was down the with being thus, $X.XX of economic per all the Display tax Paper in just and was XX.X%. Europe, Slide decrease the X% earnings benefit in the of reduction

to over moving price. So

higher tied in year-over-year see higher by commercial price the to slightly only with trend lower impact the prices. more cost that of our price/cost business cover Paper to moment. just Products the OCC OCC on and you'll activities the we hear noncontract offsetting to as Prices the and price related the segment in discuss prices due a both prices, favorable higher You Industrial much Converted million, to OCC not driven when on And to material Packaging increases trends mostly increases, by increases up excellence were push as $XX well prices were through Consumer segment.

over Moving acquisitions. to

Conitex You acquisition the impact an finally, of the exiting October see completed pack slightly Highland being related and other and from impact by line stronger $XX a in Atlanta and exchange center. exchange to the lesser was April And mostly by to X. the this in completed year, negative $XX of dollar million driven top acquisition the million, the extent,

operating onto the profit Slide bridge X. on Moving

for was very up lower see procurement the $XX with when mix, You benefit OCC million, in of is in the versus with $X Paper the which where this reduced average quarter, Price/cost, quarter the slide XXXX. once volume, and appendix fourth was by you the Industrial combined $XX prices of XXXX in RNG again Products Converted a fourth recent segment. favorable million. of of the productivity quarter of an OCC see There year-over-year most including the of $XXX price impact

on paper medium well. Although in successful prices, contract some implementing of on other higher corrugating our business. quarter, market haven't also there those price in level, are year-over-year. are year-over-year And that improvement a was contracts the indices, lower lower increases the based been fourth Through tan we on at chip, as a pricing OCC as reset also bending driven by actually such

As driven QX all capacity. mentioned added price/cost last as earnings, acquisition, expansion seen impact the in is slow mostly of million by board Highland. acquisitions core businesses a the industrial seasonally we've period regions The on our quarter, tied for world, $X to Conitex of from in margin

productivity. manufacturing to over Moving

million. plants, shop million, and business $XX plastics, You can million, negative but the to the of finally, million challenges plants Normal This California. floor deleveraging deliver particularly were fair $XX struggling which of benefit by improvement Products partially $X see in year-over-year accounted Paper would've of Converted quarter driven $X change Industrial pack was inflation in was the in in center. with it interruption particularly on impact a alone And and perspective, store-related year-over-year. from businesses produced, the by exiting category recovery cost for many lower the a say this the volume volume off the perimeter Atlanta the unit is to some was consolidation overall by unfavorable levels. two at all-leather of year-over-year offset disappointing by significant basis and roughly it But the in segment the soft was the operational very was including

operating on X.X%. productivity flat were X, to acquisition and Conitex Moving notably led find acquisition Atlanta the due sales moving Highland were by margins finally, driven costs primarily which our the improving to XX.X% center. Conitex operating with the thus, X.X% up compared sales where operating of you And segment Solutions to improving sales Converted were interruption to were to Paper sales. the but mostly covered can operating to XX% profit most and up acquisition operating Consumer Protective million XXXX. the $XX down and favorable margin due to the Products to sales down the profit total manufacturing operating almost due essentially operating and to X.X% profit company-wide notably All XX.X%, of almost productivity exiting profit see Packaging company profits more but the Packaging due X%, fell as ending due the price/cost, and than Display where sales down X.X% were X% price/cost, the dropping Slide operating the business profit by productivity. profit slightly margin higher XX%, percent with in to and up but X.X% but margin by proceeds, analysis pack by manufacturing X.X% impact to up you profits the most off to and negative dropping improving Industrial operating not

another to a and soft XXXX few of year the cover the and year, not update in itself businesses. our base cash quarter So now represents due final to on Julie company. in will great record earnings GAAP added an guidance rest performance summary, flow. But our for in when the for a

Julie Albrecht

Thanks, Barry.

X. Slide to Moving

our per to of earn share XXXX. see $X.XX base projecting in of are share the at between year to quarter and first we You compared quarter and guidance period earnings $X.XX in same where full first XXXX per the $X.XX for

higher XXXX slightly volumes growth driven in a acquisitions. range not the by significantly for from full earnings Highland first earnings combination and Day a what benefit positive at to Overall, the $X.XX productivity with the effective $X.XX we projecting of rate Our our in to and be total price/cost, and with are share quarter full Investor December, to have $X.XX Consistent of expected we per per a in December. year in tax price/cost, our assumptions midpoint shared and Conitex shared share. is be of our of we year changed what volume/mix,

to Now earnings turning X. cash flow on Slide from

year. You year million for operating the $XXX $XXX prior compared cash flow the that million see was XXXX, of full in to

In strong increased and to in pension defined-benefit solid lower our U.S. XXXX main flows drivers were management working to contribution. capital profits, addition the operating cash

after proceeds sale was paying So cash capital asset for after of of dividends XXXX. and of million free $XXX flow $XXX net $XXX million million, spending,

items guidance remained removing million is XX% range strong. XXXX prior cash Our our On free analyst liquidity very positive our million note XXXX flow cash we our for is what our for million to of flow increase balance flow to Slide is I'll And sheet $XXX unique range we a to at $XXX provided unchanged and a December $XXX meeting. operating position free that of of and million. year. flow that the be this million. over expect $XX outlook about This outlook XX, cash you a in cash year's after $XXX XXXX, in from see

we of cash the of approximately fund $XX financial and XXXX reflects used million XXXX year-end flow of cash repay debt. cash balance $XXX and completes cash decrease our year-end $XXX in of At around million million balances free XXXX, of balance. a our our million acquisitions generation from Our certain review to That $XXX during high our a quarter. level,

turn to additional So I'll it comments. now over for Rob

Robert Tiede

you, Julie. Thank

and we're and the Let our XXXX operational actions me see in about targets. a taking talk on more specifically and comment what our performance entering bit XXXX, then meet detail, financial to we I'll

Sonoco produce produced balance the extremely strong us demonstrates, further diversified Clearly, top results several strengthening performance record our believe to our we improvement us how strong, bottom earnings line, sheet. while consistent cash XXXX, including results the in further makes years. and line allowed business past over flow

was performance in in impact quarter performance its of challenges, accelerating our choppy and including this hurricanes, a without Packaging inflation, However, not segment four. the tariffs Consumer

a of from of base from by rate which of As $X.XX fixed to few to up positive other and negative a result I'm manufacturing in grew a companies, GAAP most let X% to share. volume/mix record numbers up as selling Cuts like record $X.XX earnings modest course, lower and you effective earnings so $X.X growth. cost offset tax higher acquisitions, a XXXX. were partially diluted earnings increased relationship, negative income and me volume/mix. a billion a Net productivity freight benefited know, while share price/cost recover to implemented result to guy, share numbers of the a Tax and XX% material, were XX% due Act. per And per we diluted our highlight acquisitions, Jobs were prices U.S. and a rising operating savings per a costs Base as sales

our at segment more Looking closely results.

Let Paper which operating Products a a record in XX% had profit achieving improvement me XX.X%. basis and margin points Industrial start with XXX Converted to while improved year our operating segment,

negative business industrial offset positive manufacturing lower relationship, fixed modestly a and benefited and negative global cost acquisitions, volume/mix. partially from productivity Our by price/cost

in operating income basis segment decreased XXXX, XXX XX% disappointed Packaging with down segment margins clearly Consumer while Our points.

into in in Africa Europe the we have XXXX South with projects another for global performance U.S., quarter composite turned growth aggressive other new and the operations second can XXXX, Asia. solid business up Our in and growth plans along and with in Brazil starting

volume packaging much flexible the than and has weaker plastics was expected, in inefficiencies. rigid particularly our as which struggled, resulted fourth we in However, business quarter shopfloor

not optimize Packaging efforts analyst range commercialized early leadership have XXXX. customer aggressive consolidated declines to to be as Fuller Consumer early facility in all mid-next working changes, we of XX% and execution made our in in we're improved, at packaging flexible for we you our flexibles demand represent to And end change quickly year. contracts plastics and we'll meeting improve capacity. mid price XXXX new closer other ongoing thermoforming his supplier we in finally, the and over and shipments experienced improve More We in has told to relocated during improve have New mechanisms, businesses. material being forms equipment to one volume operational the this package York our year. and responsibility the business XX% consumer several do and lines to and by XXXX year and specifically, a California, has which our recover we As we're taken to will operations December, and refocusing expect at with our be business the customers have inflation. believe or production in Rodger operating of of is Overall, team better be closing equipment margins of plastics Rodger - all

best you, quarter remind me was in the the of through were our an fourth excess margin operating with our segment QX decade. Packaging was consumer and of extremely XXXX, as Display pleased profit XX%. turnaround Let in We the

the improved we're international XXXX. significant continued end Atlanta quarter. still in of in XXXX, have target. pack business, Protective business, we we center have one changes improvement We display to our Solution and domestic operations some but And of including short third the made in the new our results exiting at expect

due growth. perform to very well Our temperature-assured packaging continues a volume new to business

and with change XXXX, driving management our impacting the we free one improvement working we keep results the our believe have continues record remains priorities our routine foam top we recognize and automotive about at wanted molded consumer operating some However, of I our end for to working XXXX. sluggish year, and of and mentioned incentives. flow efficiencies. in cash capital volume, struggle global which Entering conditions, been is a step already business organic growth which cash making during slowed economic management manufacturing XXXX, our XXXX, improvement but in capital Julia flow to free realistic for flow cash will

Consumer only these in raw rigid volume result, material performance a modest we And flexible job fully To one packaging. in plastics improving growth are and recovering margins in projecting reiterate, a and priorities Packaging As better particularly top XXXX our our our across other is and operating and businesses. inflations must do businesses. we of segment, the

Industrial and segment integrating pursue team, enter to Converted aggressively focus Solutions. and the opportunities Coker and excellence and Packaging Howard leadership continue Protective in Display initiatives targeted in reduction had continue commercial and to Paper our The cost on and Products to Our recent we expected acquisition. Conitex is actions will implementing turnaround by operating expense growth while XXXX, must

to drive well processes to must and to consistent as continue strong we portfolio simplify flow structure, earnings our growth and returns our shareholders. Finally, cash as

to consciousness, his brought recycling conference will years, this In last particularly as to Financial Barry seven my of all last Chief has Sonoco's celebrating and particularly for shifts wellness, and anniversary on we an well health that is is to driven consumer this that XXXth us in being environment positioned confident and year, increased XX-year Officer. demographics, social express Barry's a portfolio our remain around me let and products compete gratitude to recyclability during Sonoco our be change focus and its call, related he behaviors as have Sonoco the by and packaging. economy career, digital closing, in sincere

you for six the Barry business worked he this Chief expertise, our leader - more don't different has of As but know a not of but providing duties, the past leadership Financial only company. in sorry, he months, has importantly, also been is Sonoco's the a have trusted financial recruiting taken technology CFO, Officer. three handled group Barry CEOs, CFO on new but Most with we Information our as interim Chief has

to thank In Sonoco, until April we well away. months fact, of in us, and I the Barry important stay transition albeit Barry, all that behalf in wish retirement, company. assist to you we asked of at still of on the function it's you, of

would operator, that, with question-and-answer Now please the review procedures? you

Operator

[Operator Instructions].

with Baird. of question comes Panjabi from Ghansham first Our the line

Ghansham Panjabi

that standpoint, of I guess, Does quarter You Rob, in the sort resin customer business of from bit just any prices? in ordering fall lay mentioned, a of on given a improvement consumer. delay first far. off, sort an a XQ so see there's free been of

I'm initial So well. to just to expectations? quantify what sense kind of also could get a in aspect your as just December you that versus trying as changed

Robert Tiede

Yes.

Let me because it the plastics down on Ghansham. it flexibles break the try was predominantly to side, and

I So at if last our over - I doing take was our a at I if flexibles this weeks. business, fact, I was looking look in the couple of at look bookings.

November Our the customers one, out. [indiscernible] see things, was rebuild and were couple did of fourth orders see push that But some very did other we the bookings we presses December we our one did thing quarter. a of bullish. we in happened What in did was have

create other met terms have backlog a move As of us. facilities. our book, expectations in for. I a it again, in business we're that at flexibles result, looking of order we bit the to If look for what January, in a a to take did And

our we our of business, quarter. occurred that business some to X% couple in the flexible terms at of fourth in plastics context, expect things I grow the you a So If this look year. range a to of take give

And a they customer it the we where launched frozen to children a we as you substitution I had talked the molded food clearly that. have a related out And we think some product about fiber in testing segment. - that recall, if business our impact an saw construct. in

of if on One fourth in impact and side. have of specifically impacts in you rebound. as also we on in was weather size had romaine to other saw both lettuce there as in And And side, recall, our the to us crop slightly issue the an recall a we a plastics saw Northeast, side and the sorry, it construction think apples significant we well the as apple that was tubing impact it on about areas. quarter. the the So the northwest, that. the plastics But X did or our - business, fiber business a specifically That comp smaller-than-expected. starting as business, of related the specifically were see Northwest, impact up I in as were lastly,

they - trays the smaller a So versus of bag into apples we've some products those plastic place. smaller that or have moved got bag in a versus

all I've in not and not the our sort make, a year in what in gives head weeks, So does that, a we the because some you north if with of X%. seen we weeks plastics if it's six we right make know. But I background. into XXXX take at am plastics a color as growth quarter performance side, pleased of a being you as expectations again, with six our quarter and the will, look on first track does

Ghansham Panjabi

switching end level Okay, helpful. that to of so any margins? China? operating weakness pockets it pause exposure relates or then Are And business very XXXX. the Conitex related a you of And to sort profit market for with and that of with and volumes record that's to close it Industrial, obviously, for give Paper super just and particularly there as

Robert Tiede

Sure.

question is Let a walk do me best start to with Conitex the your number way performing people's because around Conitex it's as is a minds. what's answer then on expected. maybe globe probably of the and

Conitex is the player a to East in is just got South market. it. Asia significant element You China one of remember,

China, market the in yes. the is seen in So have we answer a slowdown

also as respect would of as and rest buoyant, Conitex the busy that in very they've the well in Asia Again, the their that U.S. our South portfolio. in you However, Europe to is operations East are I got here work tell with - is plans has

second or question side, in your first endpapers think converting industrial softness talk the If market. about it the would the about relates some you that's the as part did start If Conitex tell it see So would in the I I Europe. softness with we piece. to the, of I side,

I And mentioned the paper year we are but if think the side our was saw softness we robustness I we some that a about seeing ago. is X% on Container about softness, news watching answer And yes business in America, forward? that mild will something the board comparison challenges mill had think Barry is is to The a pricing converting strong. that North to answer we're closely. The still it's our as full. has where good something monitor going on move closely, we're that dropped. But is yes. it is caused some potential OCC we

things, the specifically on softness in and as takes some each side then other. Brazil. offset the should think we in well industrial of have So puts And America I South those seen

Operator

next Our line Rodriguez Edlain of from comes question the from UBS.

Edlain Rodriguez

outlook Rob, what about plastic the seeing for you terms And are M&A, of in the also can out like you the there? acquisitions? talk recent performance of

Robert Tiede

Sure.

of the store So I mean, yes, would be plastic acquisitions. the acquisitions perimeter the

store So focus let was for the to rigid East did year. me of the a business do going side. earlier let an we respect That on Highland have team. Coast the impact plastic the have into respect was growth recent customers. referenced they us had doing reason earlier. excited that talk entire perimeter a for we store. that start our Barry perimeter continuing, the about the But and but the how we a that together. not facility, as that liked part on context had projects with is with moment on good the had management very but and which exceeding fact contemplated with the finish When now we solid had acquisition. Highland, that got What the and little And not on to the And deal, Peninsula contemplated the team constructs the they we me it which being now runs bringing flexibles it we've just a fits plastics that the did productivity closing we of we the And so combination construct expectations rigid of It about we're most only Highland one. done. a of a our see also a very thermoform still with is We

So we're with seeing that. a respect opportunity to lot of

we we that will expect So grow about to in that the continue the talked business past. that, levels the with side of

Edlain Rodriguez

on volume quick One weakness one the there. mean And expense volume? some in I terms I is you're left do & mean, volume losing balancing seeing of of Cores. much Tubes Okay. there prices? definitely with pricing in to you at are how

Robert Tiede

the we that it would depends been only the would've with Yes. tell experience consequence I you that, volume the again, expect on we region we to of in And to that. that come of world. any The loss - Europe. expect moderately back to respect

our core are line as and which our is is operations for operational leaders with business. in in tube Coker. terms excellence, in in focus, with side, And expectations into that it with relates the to us in same our focus market that's work is it already put being of that Europe. along of right the America, And - we the Howard body in North biggest Here, that Europe what begun to that has applied

Edlain Rodriguez

Good luck, Barry.

Barry Saunders

Thank you. Thank you.

Operator

You're question Lynch. next from comes the America Merrill George of Staphos Bank of line from

George Staphos

Rob. congratulations for just consumer thanks, come of and all talk the congratulations and little performance about you, to back in it, want to us our Julie, support Barry, to the well. as a all research, of again, I

there just are long you're is and issue you're a suggest of pushing they maybe out terms the are where to short-term would terms seems saying that all issues them actions like the surface this fairly the it In comprehensive, brought some orders some it kind customers of in largely fourth were building - which Yet quarter of beneath was taking bear. other but factors.

of or your expect lot times that about issue first with there have of volume business volumes relatedly? short-term said missed of here. are we - worry to a any not I businesses might have or back for agree in starting while, pricing in when struggle come Atlanta. are that you structural you as you terms like disagree issues know would been is So other premise? And the quarter. much so the about hear i.e. kind stop A it's priced, I'll But

So that. have some questions one around follow-up be great and after those would thoughts I

Robert Tiede

Sure, George.

let yes, businesses. think Structural don't those So so. I talk issues, me about

I week that making let time because And It than press, was and running flexibles happening needed press been of back being have is just business, that frame. able because think to And that business January. we some we by over granular. a machine. happen the In do that migrating get where up do contemplated - relocating six longer to tail onto back engineering that anticipated the now and was rebuilt that. and we business that something me some we're actually end weeks the at the But six ran issues. of that

and laminator We press old also laminator. one our presses facilities to three of new retire new be a into put in a to able a and

And so that improvements. should drive productivity

And so driving what's that's that.

side, and a I January. seeing in pleased what on basis, said as December. on November was the looked I I at monthly booking I as was And As with it well

big that going a of call this that the about the facility closure we people midst about may while the also the decision this sold. as engaged in were I and - starting of issue business. were plants the customer consolidation we in with other closing were training. on that were a we our that think in in we there, that delayed conversation piece previous we And around acquisition where have was to had shutter it And result, going of a prospective specifically a taking new upscaled a made upon side, up On a talked and plastics going facility. the to to facility customer, as and be we're Unfortunately, process, the negotiations, of the hiring we we

And so result duplicate as system in we had a the of that. headcount

to structural a incurred number quarter. still were as are a and I my think think do, in shuttling will we machines charges the learn that as areas recovering a behind made specifically. rising in of and then, I we want. things expect I curve these said, we so from do freight run people also But as And some facilities do standpoint, where that, cost of moving I the things material That and comments, significant having solid. a said from be And opening some effective we that's expect run comment in of product away drive these us. also, around, a We customer than of price in lastly, the is we from there not new lot the we learning first this further

seen George. Hopefully, line a perspective. number from So things what it's far, you gives out, that order standpoint, But played with expected. thus that some from an we we've of it's what in

George Staphos

for and that, our Okay. quick model. turn well, one I'll here a record the over. and That's it very to One did very performance I there. think clear. It's certainly I not last versus me, Rob. relative But XX Packaging Display you appreciate nor years. set

the effect extrapolate seeing less, we seems e-commerce call, XXXX? should a What this and For that of are volume, over direct-to-consumer, on Packaging from progression nine the sitting effect comes Display periodically? if what phone, in continued the rest that like? more this the you analysts of or quarters which strong And the - conference margin up year-on-year real trend on and

Robert Tiede

I X% would throughout we achieved year. in fourth that not the the the quarter Yes. project

of range in What we're - And I as new seeing the that here that to I is of our think comparatives did in wonderful think this directionally, And somewhere improvements through that picked both up internationally. year. throughout Part business. prognosis we course new I well a North in will, is clearly, historically, you, would X%, range. the center we had fact some see some of the as volume if of a this up expect said, Atlanta we we've displays. X.X% pick run was that America we QX year. we in you pack tell the it's continued long-term

if front the you I displayed shopping multiple or more that least their product interrupting of we their we noticed. gets product that will, people really traditional sites positioning customers see said, experience and product business think so getting and gets to That lot displays buying in at and side that the in out is here. do display-centric as, back a international had certainly as still in

Operator

Markets. question next KeyBanc from Adam Our the Capital line Josephson from comes of

Adam Josephson

you and for to to hope feel Barry, congratulations then moment. better Rob, back one I consumer one a commodity soon. And you. question The

on expecting your if already on in know me it benefit? $XX just and but We you the have for February. OCC to Just XQ early resin. expecting I'm it's were Correct you in to has of OCC And OCC resin if update in terms prove you're what XXXX far expectations the $XX, by and happened changed? as us so low Could these wrong at weaker in recently been as in [indiscernible] went OCC expecting November-December. year resin prices, December, happened you're down prices least it

Robert Tiede

Sure.

with start So look respect you for going me OCC, With year. think resin. we I What to around based that we've of question. on the our we've ask $XX done I is the forward know were done forward. look the let balance to

be it perspective. that there your to the looking some With the of what's see sort magnitude benefit. question, or to may So do some ebbs flows respect at of benefit with we and from expect

one which things the and is think what's puts in by my plays benefit container ultimately the the eye through the I is any board otherwise in don't might take offset would a in takes that its of know keeping that close we some are on place that where I we as market you we have would up yet there, we happening tell quarter quarter. the be pricing would out. go of that expectation this certainly that that and

that's being respect But $XX see that my that. with is where that hope there February. to we on So in don't drop - what I'm a anticipate benefit we wrong. experienced head I I

resin the On really nothing's side, changed.

overall we and here on but standing built be much there an pretty I based There's decline that movement our going expectation. we're behind to forward-look always think of X%. some about

Adam Josephson

the I the I what over And better the segment. or flat in XQ. happened volume-wise know after X you is talked past your If I about think being weeks year just in first of consumer. six so volume on that go years back essentially XXXX, to

for recurring a So years. of there had volume difficulties number

any to 'XX either. in obviously, any of and reason expecting company-wide - you're growth you consequence So not have volume do

that So about in weakness your weakness about And ready lot further - back you talked was volume and 'XX. the future than XQ Analyst foreseeable you're sales do you anything X% volume in for then to Day organic XQ. weakness anomalous just - there the and growth seems a it about with of particularly talking you gone XQ respect to

is that light expecting organic growth think still reasonable in for least of what You you're X% this year? at

Robert Tiede

Yes.

Over long we horizon. is term, do the X% planning that talked think growth the achievable. I over organic

question answer sort I me of at. that you're let the think getting So

in over is you developed the was one we've number the of by of can world things fact the of the And growing been recall, offset space. were declining. have years and If that about plastics talked the the composite that flexibles that a in we part

in I looked volume, said, see to think we With world. developed Europe. see As of expectations I growth at that we that continue and in will some did

developed growth in world. terms take in We continue entire of double-digit that the we Asia. see see some back nice So to And in I growth clearly, Europe. did

balance but us of both, flexibles and if reason a other other of you not no piece will, sort believe out. in fees calculation it mathematical there's that a sort So at to grow said the rate cannot this for the that plastics each we

Operator

the Gaffner from comes from Our line Scott question of next Barclays.

Scott Gaffner

been you. pleasure all over the with help years. for Barry, working Thanks, It's a the

So luck on retirement. good

Barry Saunders

Thanks. My pleasure as well.

Scott Gaffner

and with while question cause the the Was the inefficiencies a wanted fourth removing to gave just that the clarify, I that some from store of of I just about business the the mean, a I quarter? quick there you you for Talk anything of mentioned was store. thank, customer, some plastics in negotiating. on are closing as perimeter operational perimeter you there consumer. one Rob, concern got are sold you volume perspective down,

Robert Tiede

Not sending here some East The think of to they gets so couple Coast really. January pushed about, delayed Has California. videos crop were an keeps of still a little lot Obviously, a We and at as If picked being weather weather of bit. weeks. last over growing the let's on is customers levels into in somebody the the - a shipped impact example. some out rain use example, some maybe had there picked, for this cold business. of But Yes. record I our me things? product it product and

to scramble a is on up there mad caught get So things.

mix return and margin? are also customers? a at me reasonable that to taking suited customers. make that we and this, on to these we're Howard have value not, and other and nothing would driving generate would a if those saying, look taking say that. we really I the ability at serve that that do is a this and our tell of caused our The so And expand some effort to point, And look I no. you, There's reasonable is So we're about, customers do one talked for a best thing the at we customer where we

initiating We entire roll America. North in to just the we activity. something be that, are going that So that side, said started, the that's an about, out not That's company. throughout we tubes talked we something in industrial cores to specifically that is and in industrial-driven going

businesses. starting our to principles of be are of all in Some applied those

Scott Gaffner

through packaging Okay. with base acquisitions? business And you of specifically be facilities than bit curve of managing of little is just seasonality a I learning to takes mentality kind learning that. found about, some these there I'm curve I on different I of a that a therefore, a products, you running more maybe little mean that some it your talking associated there's mean, these guess, the a more when Is there. fresh as and operational options? natural maybe lot follow-up and this move and you're -

Robert Tiede

Is in Yes. Yes. you're acquisition as seasonality? I would number it learning learnings the them. is you relates as there specifically any that getting curve a tell of that go through to you there

in the terms expectations. is read and folks to is getting did the other and one our good the field think of and Highland how we why intimacy how with the out the Again, I need you that they the have customer. organization the of and a approached buy her customers, team commercial forecast with organization

that same old as the that out benefit Peninsula was throughout that brought into Highland is huge think approach the being is rolled equation. all side. on a the I we operations And -

Scott Gaffner

me. for one Last Okay.

are following situations. expect How look issues early in Converted had the forward still I landscape not When out in different change that's on yet that change Industrial going Just and financial into overall over and you the consolidation. you mean, bit you today last of competitors. the ownership on should Products. consolidated Shall competitors of as a business in it in feeling your at right little Paper some and that? years industry's competitive anything few went of about we and ownership one

Robert Tiede

unnamed into the marketplace. Well, we the welcome party

group I understands I act have think are no a in that marketplace. that appropriately the that they the they to and reason industrial won't space believe

Operator

Sachs. Our of next Brian Goldman comes question from line Maguire from the

Brian Maguire

add my to pending the congrats Just retirement. on Barry

Barry Saunders

you. Thank

Brian Maguire

Just volumes. a question on

the related number kind of of and put the that, a to you know I in environmental do of composite seeing finer substitution? you sort into higher. think you some Just cans substrate kind having? that a targets of the some brand said X%-ish point owners it's for broader tied Is are sustainability that of Or on that Do strength of 'XX. a your to outlook sort Europe. think slightly in you're is

Robert Tiede

it We're different seeing yes, think of I all, is you're X% that And of terms world. product. a rates. seeing not the No, I it's sure lot in first referencing. definitely business. substitution secondly, today then of the we a clearly growth can I'm don't And substitute - that the are around We're mentioned

in nice expectations be growth up While a in bit a than Brazil. terms growth Africa We year, in that Asia, last growth better Europe. We're year also the to in facility starting and little Europe last and of we're and double-digit another saw growth in have business in we saw overall Asia. may in can in South facility expecting

from facilities growth those coming of So both some well. we as expect

Brian Maguire

to Okay. And just turning M&A.

You your have some targets. in there sales targets explicit contribution XXXX for

Just on the some macro part thought choppiness business might that wondering you'd just in of I just come be months. store, interested. of you're to your as of get to I wondering think some there wanted be the last have that couple shifted And it of the the that's far if it down the market. And as of you environment? closures could after expand. direction but comment and if comment the overall I'm in on perimeter of looking multiples mostly where being

Robert Tiede

Yes.

on in opportunities very as in fixated domestic have they flexibles. look to our we would how rigid business. over developed are, sense where in tube what and We we grow the So side the call that around But the core still And consistent the do market of world. it talked for plastics, our support that's we at acquisitions. developed the very want in grow always and we we were focus on last And organization terms I'll infrastructure to about number relates to specifically and where years have in said acquisitions consolidation it, of want it in made also side. said the We business world paper us thermoforming. growing position good we

other about are We the markets So trends about it's the want participate store we on. us think primitive attractive that not focused to There are very as are just the we in. segments store. we that as limits market of macro that one to perimeter think larger

Brian Maguire

was your I enough up included for in pulp was wondering me. price mechanism? up your significant last to paper. in Or that's contract get The Okay. one picked The was guidance. cut by picked medium it that in and if

Robert Tiede

going, in Well, what looking price to those at the at way that we least think offset the is believe think movement would probably of some of true be terms where movements. we OCC is, I we're given

So they should offset each other.

Operator

Our of from Wilde next the Bank from of line Mark Montréal. comes question

Mark Wilde

of I right how talked thinking Rob, you've start about and many off a margin think want XX% that And protective business, just wondered years, packaging. I that one the in when over margin kind to for now. on you're EBIT I just on about XX%

Robert Tiede

we're sheet a just I grab at. can where out find me Let

we we've automotive. believe I these If the achieve you while XX%. out, is the move fiber automotive challenge you'd biggest have to both that from reason got think think together I cost going business, they think requalify love The the that could very in business. to if not as we site. and business to another is in the to challenge three just call no taking costly while [indiscernible] this me protective about post plan all So business down what is buckets been that was And sector. sit about then we've part There I about our I old bundle to ThermoSafe for traditional

remain So can deal that appropriately. variable you you say fixed to cost, cost with will need while

it the paid So the investment back cost would of that given if have moving lifespan the of of project.

way, another I maybe So be didn't said very much would automotive, XX% if have Mark, achievable.

Mark Wilde

it Is achievable automotive? with ultimately

Robert Tiede

prices where go which given You is back from to there of going you know to we the be a up before. were a what, if smaller and once then shift cars, the see it's goes bulk Because yes. gas products those though if people - challenge magnitude we But of the make with SUVs reality drop into, in cars, automotive. is

Mark Wilde

it amount of Are margins deliver that to and a across and talked do and things margins fair little Okay. kind And business, there try I staying to consumer just more the about consumer has already think then consistent a which seen of volatility. that thinking you this bit stable on can of about business. but

Robert Tiede

healthy to of And Obviously, priced is reason we to sometimes appropriately, long said, range to to But margins. about drive that pretty platforms and than we be cetera, better that I have if believe there's But But the with help of that yes. - et et historically it's obviously, to for try those no within. a to the talking other something growing range Well, XX% offset, stay declines will, for that a can't of a that yes, get think the get some answer cetera. some is that. have you you we XX% seen. little types got us been we time

Mark Wilde

seen one that? to year. months last quarter in divestiture the I first for we've were up noticed And that Okay. nine you bit any light your of shed what relative around fourth Can for and costs quite the me. the a acquisition

Barry Saunders

Certainly. Barry. Actually, a pretty accounting you when interesting this is Mark, position. acquisition go fully is position a owned minority from to

part that drove So that change. our Sonoco recognize investment. related of to joint we about as some And cost what there's had on the to Conitex books previously half venture, that we of our had

Operator

Our next from Jones question comes from of Debbie the Bank. Deutsche line

Deborah Jones

talk flows to My called by being I And you that? bit for the first new out business. that wanted flexibles. How X% also scale about much Also, it Barry. a Could technology, And just your of little congratulations to you volume your it growth driving be driven items us of mentioned you that is? more sense question what's some how whether give a just it was

Robert Tiede

Yes.

it's into it's what marketplace. by being Specifically, but and I share is. products some can't it gain tell you driven that all by But new who being been some also the driven have launched

terms in development, this. new of flexibles new from I But are go forward was think developed the to product products quote don't think on the memory, the all somewhere range $XX-plus into year Debbie, we that move color. going last or and you that business I'm I - so me that expect of year. next some Hopefully, as gives we range highest, something probably in in million see better slightly we would

Deborah Jones

then Display And Packaging. and Okay.

curious things You also margin comments, marketing girls that to volume business improvement and of and timing all is, in of take the some business? to you just just I'm where in do but what that also kind versus about you Atlanta. was X% improvement, some a long-term relating near-term efficiency prepared mentioned in said the there it that and terms could of your said you what

Robert Tiede

Yes.

business we've to opportunity Atlanta candid, things brutally side One energy I people's I'll those and customers now executed that So fourth folks and pack couple new being with done us are that engaged center of Effectively, for and win the And to that areas. normal been if did their in that grow I'm in the of We also opportunity has with. effort number folks we business team other a some roles. are have refocused what have think further a And in and creates new the took call that some business customer. business. then a of of lot the we redeployed quarter. grow been into the customer other do back

typically, in, business As answer seasonally-driven. the tell businesses an that specific the I you display is than timing come have for of you don't to will when other that all somewhat what

when So would the part the business into starts rolling typically, early of QX. new be QX in and

Deborah Jones

the last Okay. one. insurance there. I I missed I ask the recover in quarter? if one And know that but could the this it's you you it [indiscernible] had it proceeds guidance

Robert Tiede

Can sorry. you that I'm more Debbie, do time, were say one you up. breaking

Deborah Jones

The in quarter? proceeds Sorry. that the you insurance recovered

Barry Saunders

very was shared much York. with in we line it Debbie, in what New

If you in at was expected we that and our guidance $X.XX remember, time. about increase for our the it reason that

Operator

from Fargo comes line Securities. question of Wells the next Gabe from Our Hajde

Gabrial Hajde

Julie. I Rob. much to want And all ask echo the congratulations into read to it just Barry too and you, don't

your I be to your year-end at set be you there mind, or economic shutdown trade. pause? the to slowing at sort or vantage seems customer our averted this something point specific, conditions tone mentioned the of set press But product release. base point You Is least government of and in on guess, at looks the to overhang from given

Robert Tiede

when of I some just consumer stock you got the getting people think market was then sector month and wacky quarter, a have retail the No. we the a skewed to And that paycheck, saw think think that out it heavily the tell the fourth loud worst you If I December. since the when about government And in fourth you've what said declining. and I data was on so December I about of shutdown quarter, recently XXX,XXX that saw not confidence and would about came it really XXXX. and towards

all a of things. was of convergence it kinds different think I

that's against that. understand what I doing, into what are - let controlling are a customers Where's also that mean, we me I taking on back focused our we So disconnect. are at how drove inventory. bookings, also think really doing the me look

bunch it of a that was so and play outcome, how will. And it factors the think I different whole if impacted came into you

Gabrial Hajde

The still true housekeeping. as that quick XXX, CapEx sits one does hold figure And today? it Okay. of

Robert Tiede

Yes.

Operator

Our of next line from from comes question Dillon Chip VRP. the

Clyde Dillon

pension because back know a you were tax. is, that million pension was charge I the question impacted confirm December you year couldn't I referenced X. degree on then I It assuming get would wrong in you thought nonoperating I just be about the that it's to number my about $XX selloff that $X.XX charge the would've situation. 'XX, now up imagine find almost then. to material like the And is question if And imagine stock I of what what that. worse again, clarity But that some could about than had on from last the that. didn't just market day. looks I was pretty is. the And appendix could slides in for the that that after was I wanted

Julie Albrecht

were higher again that amount for in Day. stock you're about we was our is is it's $XX the estimate that number performance very in December XXXX expense than slightly that This Yes. right expecting market really that And And And is Yes, drove line Julie. that million. exactly right updated Analyst nonoperating that material. that, that you're exactly item up. weak at

are reminder, as nonoperating pension expense a excluding in just base So we the starting from XXXX. earnings

And continue will we a will it be but to very something of not so while earnings. obviously base monitor part closely, our

Clyde Dillon

guiding, the should a talked don't, guess, call, acquisitions X saying, the were store earlier - I flexibles I question buying How of to buying I that side overall, at I of I the of you then you that the is. see last you couple around two And X%. helpful food be little is be think would second growth fresh we those in on fresh from included should the that you for in - the vegetables And growth for we some part years. XX. know, That's know you if then in the subset of look are Okay. know. but fruits where acquisitions think, and it, made about had some bit the a

Robert Tiede

Yes.

plastic don't we it expect total, said a of I know to on grow inside on store X% in growth at the X% built it's in side range. they products specifically we tell forward the the the the But And side in what because So broken in of to going talking the X% the about tends that you to perimeter the would look. just I retail. range. out be in plastic I'm

So we of whole. continued higher see little versus plastic at X% it inside space may and a the that the driver growth the as a be

Operator

the question comes Chercover Steve D.A. line next from Davidson. Our of from

Steven Chercover

wondering other into for was you if I year? could to $XX hit that million X. I'm referring is elaborate Slide you what on just bundled bucket the the

Barry Saunders

be just accounts inflation normal report a most would that quarter of each that the Most quarter, $XX certainly. nonmaterial Yes, that. for of million we roughly

Steven Chercover

bit? moderating pressure believe And it that inflationary a XXXX? only in is will do persist that, Or you

Barry Saunders

In certain But areas might moderating - to for expect be bit. different. nonmaterial little be a wouldn't that the we component, it we materially don't

Operator

Our next question is Josephson KeyBanc of Adam from Markets. a follow-up from Capital line the

Adam Josephson

there's that in couple consumer other no an than you've that that. questions. had, companies to before issue of plastic most many had kind XQ Rob, of of in industry of and concerns volume operate in industry been the North both whatever packaging different for are and about reason, just that about And see your challenges the Or there volume? relatedly, volume that and the cannot grow have discussion that The a packagings, for then those you you both more deal just challenges Europe. American sustainability public such have a great do that think companies in Is company-specific? back U.S.

just you packaging context late. in of of that to address have that the of that we question love many companies plastic issue having weakness been the volume So

Robert Tiede

construction as across did result Yes, we plastics, a But the some to perspective, of to we that's supposed result share. terms at typically I weakness a I weakness as cycle. tell from see where that year I spectrum. of our in think weakness said, entire customer-specific the construction some we saw of And I saw And what would it lose Adam. issue you tend be a as in we of weather we call Northwest. the did some and the time saw the

a bag. it's So mixed really

look on talk from all think serving as customer customers. and we about I these I especially - at the all large base, large perspective, our customers our of

serve of customers. lot also We a smaller

you me an give Let example.

folks perimeter will represents around of those a who getting line. I'm XXX with our have A growers, serving that - of we're XXX the We represents the all customer or store. customer product granular really

So in of other different maybe space. relates I competitors it think have as slightly it's this model that the to a we some

We compare me companies gives to have a you hopefully, around some - fair for to get that But specific [indiscernible] and a do real contrast.

Adam Josephson

Yes.

Robert Tiede

bit sustainability that On a interesting. me talk it's little let the because about side,

your about you're customers along I is your ultimately at also robust that was people story a recycled large the in our you're product vocal what that of that product product with you've very buying of talking fresh to material got be might was being do about feeling specifically be a you XX% you the and you've in meeting, very Now concern two and story. issue some know one your recycling weeks getting a of because plastic very customer, they ago, have said this customer it very is great know. with And guilty and the about discussion not and a XX And company the It folks and we been around exposed happy should your and this perception construct. to reality.

innovation It's really all So I it's it's about about think and and together. of education. engagement all about bringing that

And putting so are that's something that we together.

others ago one We with George about year is this saying, our something on of thoughts do by to customers that had plus us had a are into meeting conversation. the yourself the bring putting talked you point a of that's And do symposium we how or do number you maybe this. a a where

why job better but And better it so a a the leave earth materials for to small educating we is work that opposed it no question collectively entire will people. took we're a when supply reason in really There's why narrative look around selected. over. is a in something conversation making together plastic into packaging chain. used flexibles is at will, to just, put do there and that. And entirety got bringing others you we on plastics, as the paper us its used segment to it or a if and But of is requirements we and you together than And place back the a certain comes down there's are sure we

Adam Josephson

appreciate I the they are you aluminum, packaging only one that the plastic that paper And that's also paper, yourself making Rob. packaging. just competitors beverage alternative. other make they along that. company and given produce alternative that a of cans packaging And plastic from those not from would but not packaging packaging, about of those sustainable one we're And you lines, How sustainable hearing last Now also like how cans. some you purveyors claims composite do - your feel

Robert Tiede

look ship water. I of what of that available mean, about - out I the you I But XXXX it, we fact the news X.X story to either not I good look the think, have and all data X.X four that XXXX, factors it's caused around material. It's to if tons shipping? go Adam, about got is, that readily we million at ship recycled I when we and think of the in sustainability it's just that. into cost or million when recycled be to the when was the out think shipped at Sonoco product point you out all business. the don't think our I about world. yet. our - by to power, I What's of our customers tons It's about excited packaged the the all get I got product. So making because

feel - the We've we're doing in I also business. recycling really what about we So there. are good

unique piece So I these in is is what recycle to cannot of in somewhat a the this understanding can get lot we require have materials other be and when it think be to we deep what of and able done. that a involved economic would manner. an And

into We've not working just our but of that materials. we've together side recycling and head in of start looking to that innovation got. terms so at our in And alternatives, system technology recycling of got head

So talk have at and you and this a about length. need I beer to

Operator

remarks. of to any the This program. I'd like further session today's Schrum you. for does Thank the program back conclude question-and-answer hand to Roger

Roger Schrum

you, us thank everyone you Thank don't further call. if and give joining us us. hesitate questions, for have to again, any for to today, certainly, you joining Again, a

Operator

participation conclude and ladies your the This gentlemen, in conference. you, Thank today's does for program.

disconnect. now You may Good day.

Sonoco Products (SON) 14 Feb 192018 Q4 Earnings call transcript