SON - Earnings call transcript Q2 2022 | Sonoco Products Company

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Lisa Weeks

Thanks to everyone for joining us today for Sonoco's Second Quarter 2022 Earnings Call.

Joining me this morning are Howard Coker, President and CEO; and Rob Dillard, Chief Financial Officer; and Rodger Fuller, Chief Operating Officer. Earlier this morning, we issued a news release highlighting our financial performance for the second quarter of 2022 and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at www.sonoco.com.

As a reminder, during today's call, we will discuss a number of forward-looking statements based on current expectations, estimates and projections. guarantees and performance uncertainties. not to are are risks certain statements of and future subject These Therefore, results actual may differ materially. Please forward-looking statements presentation. to review X moment the take of on a Page the

is definitions useful to of Additionally, presentation measures under believes our financial about available results condition includes non-GAAP company's use of GAAP information including information today's company's non-GAAP operations. use investors website. to Relations of as Further the Investor which reconciliations section financial management financial measures, well and as the provides the about measures, the of

today's covering our will second by of XXXX. For Q&A and strategic call, financial quarter summary on Fuller. Howard then our update will a session review joined Howard our by will results Rob quarter a a for performance. discuss full the progress third report second begin priorities, and the quarter year detailed Rodger provide by for of followed then guidance the

If turn in you Coker. will please I CEO, call to the will Howard X our presentation. our over turn to Slide now

Howard Coker

quarterly enable up over the XX% marked progress outstanding on the that last you, which of guidance. everyone made Revenue Sonoco. delivered our the history you've was sales quarter our tremendous quarter today. the Hopefully, year results strategic high the release for our and raised strong the billion our performance in and to $X.X press XXXX. Thank call seen quarter's we and the second joining our the thanks priorities recently highest end first exceeded half of for Lisa and in financial of We've

great Sonoco volume Packaging of continued our acquisition, was relative performance solid ongoing performance improvements. mix strategic operational and the revenue in Our actions, Metal pricing stability by the from benefit driven

XXX inflationary the performance heard As over repeatedly across entire and base points industries, to last strong no this, you doubt profit to across global from persist. year EBITDA compared Despite we supply margins our basis XX% challenges from issues expanded various have companies portfolio.

in line, last was bottom Based share and outlook, base and our earnings to raising year $X.XX on the QX quarter of full our of grew we base results per to $X.XX per range guidance result a year. $X.XX. share third half again we're which On our above XX% earnings first

results excellence commercial for have chance. and of while a I outstanding operational, results and Sonoco the support supply by Our done delivering entire special these great again, an these first organization teams our to not just to chain execution half want the year. are continuing the job in We've thanks had customers. to extend And

strategic provide on been have working updates great priorities very We progress. And set a our company this further call, in later the I'll hard of better. on to even make

and second to Dillard. new to our Fortune since a strategic investment business and extensive drive to accounting, has value. a culture partner banking. global of understanding companies our improvements has with go Rob over and Sonoco strategy corporate deep corporate introduce activities. is Rob XXX performance been and shareholder strategic leaders Now, CFO, on opportunities both finance development our quarter from Rob experience in me of and our strategy and more Sonoco's you brings handling let performance XXXX, company and to with corporate leader guidance, operations, our M&A details further Rob and

turn your call the Let now me role I'll on to say, congratulations, Rob, and over new you.

Rob Dillard

and period the XXXX. X, to for meaningful with same the EPS of GAAP start EPS reconciliation base we was financial from Slide the Thanks, our increase quarter, in EPS. $X.XX EPS GAAP GAAP Howard. a On review

operating through and by programs. base margin differentiation translating EBITDA backed margin sales million contributed GAAP This improvement of and the in profit performance base operating As the base best strategic positions of improved and and actions, an is period. expense XX% base results This of footprint exhibited to strong self-help EPS margin strong EBITDA of our demand operations Packaging profit and illustrate LIFO the base operating quarter. our billion investments in Howard the on period is We $X.XX, This this strategic reconciliation net the EPS activities, EBITDA where These of as our the exceptional in into in XX% due to restructuring. differentiate capital has increase optimization improved base stable for to strategic basis Metal operating continued in stable We to was of that a amortization is resulted power strong was to quarter. XXX increase from the XX% $XXX profit end portfolio reserve packaging leverage. acquisition, increased choice. related the increase the from million $XXX which points this XX% achieved ongoing in our and in greatly XX% Russian productivity. our base adjustments, quarter. summary has same said, $X.X for Base strategic pricing ourselves profitability X defensive to performance EPS basis price XX.X% growth value-enhancing the impacted in in performance, a primarily XXX our of is to supplier relatively pricing metal $X.XX XXXX. by the Furthermore, performance focus we exit and base in P&L Slide in quarter. management markets was and environment, The points increase value

period Net $XXX was Turning grew sales in factors. by to driven This Page same million XXXX. several key performance strong the versus X.

commercial growth demand of profile. was our market-leading defensive, exhibited consumer-oriented by mix which achieved largely market volume indicator our relatively in cans global increasingly markets business rigid paper the figure net performance First, and growth. industrial pricing performance weakness by Best led was sales Metal Packaging was negative in our of exceptional well pricing quarter, of and offset consumer performance. generated stable with strong This price volume the continues growth both strong as core as U.S. particularly conditions $XXX in strategy. excludes X% strategic in million, X% an was period. of and the Packaging actions to declines international XX% durable product This in its Metal as mix of excellence was volume to our also Acquisitions growth quarter in businesses the quarter the divestitures strong. the other which and in million contractual performance and contributing Pricing nature that $XXX markets. was This strategic is market in

still Excluding XX% sales the of quarter. growth acquisitions, the was impact in net

FX was Finally, U.S. the are the $XX quarter. in note of generated net important our in to million sales others It's XX% that approximately negative and

or period in XXXX. the profit same increased million XX% from As shown on Slide X, base operating $XXX

sales. volume and analysis second diverse growth. of drivers previously in the mix XX% portfolio volume reductions performance, by sales profit business paper of improving after our strong point operating to improved packaging productivity. the to the are this is and consecutive XXX our to was offset were moderating profit and strong flexibles businesses. volume flat primary will Industrial due and completed. balance as price grew net Consumer XX.X% a in our quarter for XXX for quarter. due paper URB during $XXX has $XX to international quarter As This increase net tight the base the can has capital and strategic record sales and to profit U.S. XX% This in productivity. primarily $XXX We responsible price to essentially Metal in conditions figures. growth performance in markets to X Industrial mix U.K. to demand paper eighth profit due declined that operating market approximately was price/cost and net and XX% due segment cost. operating grew market anticipate operational the paper operating the divestitures basis cost as to flexibles X% mix acquisition million, strong stated, million, price quarter rigid a acquisitions the margin across is Consumer store strong of U.S. breadth Horizon largely in volume cost URB in achieved in point and Consumer paper Industrial million, a in project. the volume disrupted URB profit once to international increase market increased This the performance the of $XXX operating Slide XX% million the be mill XXX% business. in growth margin analysis Project integration. Europe again strong the the basis and grew XX% was our a of perimeter impact and illustrates margin X% benefits quarter

effects seasonality, of serve inventories buffering net in half Turning flow expenditures working performance and This was increase strong our was XXXX. We're to a primarily $XXX net increase working supply better customers. XX. cash $XXX million our the of Packaging was guidance Year-to-date, first million for disrupted maintaining with million. chains the levels expenditures XXXX. elevated Metal in in $XXX half of of the were the Capital of first with despite capital capital associated XXXX. This to in capital $XXX Slide inflation, million in associated operating

XX We a credit base in in our July performance a sheet net EBITDA be we shareholders capital investment-grade yield. X, support as an and strong of and conservative XXXX, ongoing below balance rating. has largely anticipate to $XX structure. our paid our Xx. At Finally, our will support return balance in completion Slide appropriately structure to of dividends intend manage we million capital to our strong the well the market-leading mission is of of provide reflective of period to as our XXXX, our debt multiple sheet maintain

guidance update. Next, Slide our has XX

and our enables guidance. full strategy this Our traction quarter us raise year gaining and is to third

to EPS We base are guidance quarter our third $X.XX. $X.XX to raising

Additionally, increasing number despite a in impact Project year. this EBITDA shutdown impact Horizon. to full cash the We're [indiscernible] performance on machine flow expected EPS of Of XXXX net not million raising operating Production $X.XX supply to our the guidance in working -- will inflation base XX full updated third the due $X.XXX guidance for raising quarter to $X.XX. and $XX billion in to have million also guidance that year capital. fourth capital. our our operating We anticipate reflects guidance quarter $XX paper we working chains guidance the the profit full to base to our $X.XX note, of year resume uncertainty our will billion. on and base EPS strong We're our are

conclude will prepared Howard Now, remarks. our

Howard Coker

Thanks, an on in going the priorities. Rob. our to if XX of Slide strategic the presentation, progress to I'm And you'll turn update provide

remind through a this with much our to and continue going we long-term room. and aim have on is role better I'm on operating result I'll remind at chain to about stronger on Sonoco first that to really me month outbreak At going hoping imagine and remind to XXXX. compounded pandemic comments build getting one by for supply to look was portfolio. were thinking value my before optimize you a playbook and start repeat. team like Fundamentally, the time, to change COVID in that I amidst organization these carrying you in To worsening us. these profitability some We're creation support planning asked model be that a will the took would amidst [indiscernible]. sessions is I'll company step would were what the I our our conditions. Let our feedback and look I challenged them that, a a planning our you that in shareholders. in that journey. and CEO the do portfolio of footprint to sessions global

been how In have in and focusing these here United well Europe to intentionally are yes, and to to The around and win fewer, retracted we operations XX% North markets lens we exit We're of Asia, and we're our bigger States. manufacturing South and Consumer scale in and Today, America, determine where industrial paper over optimizing of some management parallel, a our represents Europe right to Packaging XX%. have business portfolio where focused our leadership to has packaging and believe in as unprofitable outcome using footprint. positions. organically We growth opportunities, rigorous gain we America segment invest to the a on otherwise. on efforts particularly businesses, aligning

focused and, in is right the strategy locations portfolio couple margins. superior course, our Our service and centered improve on with operational maximum serving efficiency of customers drive to

we're the model, a expenses. workplace operating and market. more lower focused diverse set to leveraging In structure Secondly, streamlined simpler We're support this with doing our businesses and infrastructure, of inclusive this we're on a services. excellence to actions aligning best promote greater focus in highly building of process to and a organizational a with talent scale larger shared a these standardization talent centers and labor competitive through hire

We have a company. levels for these great changes positive leadership team to execute on all the at long-term

investing projects,, with In we to high-return have growth consumer Rob and productivity our to record spoke earlier. of recently course, than improvement. expand capital $XX We're allocated few business our domestic $XXX to investing investments. million more metal led paper industrial to and flexible global name grow projects our $XX can to capital a $XX we're which organic business new Horizon our can our also Project million and division, million other of grow for million a Thirdly, XXXX, into on by production, packaging

As our with further and chain are next operational, the supply we we margin excellence and in improvement December for over actions programs shared EBITDA several in Analyst Meeting, commercial self-help investing growth years.

targeted to evaluate inorganically addition core organic businesses. these augment we In investments, opportunities to will

and to gas both solutions recyclability while our recycling and reduce mission footprint partnerships operations by drive in and through the XX% supplier meeting These emissions increasing the to our XXXX. to that and sustainability commitments products focus customers executing products sustainability by targets of our we our work Lastly, hand to economy central circular with on glove to on our we're reduce environmental our commercially of initiatives our greenhouse improve design. aggressive is support

get responsibility You publish sustainability more we information later quarter. corporate on this updated progress when can our report

for be continue been keep cash priorities. our We're to XX years and will In sheet. XX of this by Sonoco navigate more we maintaining never capital with years increasing aligned balance to organization. initiatives, consecutive closing, I've dividends allocation to been a and over strategic committed we returning to strong evidenced excited to I've as a shareholders our part of As these

and strongest We operate are we're the make only we not to about our shareholders this in company making on a create more into Sonoco how is but am performance the will we step I change improvements in value the optimistic future. financial better efficiently yielding history. taking year company that the for actions the

Thank Sonoco certainly have. support. your may for you for questions in welcome you your interest you thank So, any and we

Operator

[Operator Instructions] of Cleve Our Rueckert first line question UBS. the comes from from

Cleve Rueckert

of set Congratulations results. new on

sort questions of for Just high-level on two guidance. the me

curious, of take called just I it understand sort to you the I'd And cash the appreciate the second capital outperform unlock weighted I'm Firstly, you but normalized implied what us to and what out like cash is you to like I guidance? would half release, future. margin then working flow returning that margin flow guidance. perhaps the secondly, that about rate I'd can a contemplated And talked whether give think of is a run QX to in in more just the know it's sense if and just your in

Rob Dillard

as sure. Cleve, and and flow the Yes, discuss we question. then margins -- take let I'll question thanks Howard cash that I'll well. Rodger can for

in of definitely We're elevated persisted conservative. say to customers. trends led chain capital were seen kind being would I a capital, working areas. that half of But we're to stable of the first our So levels. release kind The inflation we still of continued excess inventory have supplier on trends these so we've in has some And seeing working nice and we've persisted impacted that disruptions net there. in supply for starting levels kind which just some has as has

value, to of really thing have also got of the there. your to a want note think fourth meaningful note, to efficiency. imagine, the we the control that opportunistic in we're other or packaging, can guide or opportunity key what how packaging. kind meaningful the manage we're in on this say relatively ahead capital we not will on to I'd And metal that's and season. as we're releases what it now improve unlock whether there's this seasonality to the really variable, asset new just and initiatives past And be timing to in achieve future. but the about we've control accelerated of, focused you we quarter We after can and -- question it's We working next -- year what's exactly

Howard Coker

to. talk Yes. inflation let quarter. That's got talking margins. the into really third the me fourth Rob on discrete commentary inflation, alluded about normalized Cleve, that and that the We've

$XX noted and number between the also industrial with restart. $XX shutdown million impact on We the our have XX side and million

and finished some we So etcetera, we've supply as publicize out chain, retirements got the exposure, that year. we'll

you year the now. not If but about year, this that next some bullish this really are just right all and to color extremely beyond. continuing kind only we on to year are go beyond into performance going that things And you give of macro

working to the talked costs we're walk you to in December, this If for the think going year the little XX, some work. self-help million and that X.X years, with we year, our been benefit. number We've benefit about year. of that, about $XXX next but incur last Back frankly,

think and kicking on I that putting excellence is going seen business on put portfolio the the really from that side. business improvements year, as prior into that the capital keep the frankly, and we've I starts and most into got that into But the today, on. we're next metal owners optimization in tailwind commercial benefit synergies the we've could acquisition continued the

headline expectation remarkable going year and we're to out. So future this year and to that do having not into year is the is step on improve the a here back from year and in that on real next the we expect

Operator

Lynch. from Our the Staphos comes line George next Merrill question from of of Bank America

George Staphos

could help could Thanks for services congratulations with working wanted look at I details on you that us quarter. shared the sense give for But year. on And next if could sort area XXXX? Congratulations. there's the pickup been what pick we up to understand way the Howard, that looking year, to for and to talk quantitatively, not if Rob, of as sounds self-help that if there's you. directionally, like be a not, point. that on much, any to we reasons, perhaps. that forward question. could of and this what you It us on into be understandable

Howard Coker

take session the to different towards Q&A taking doing a we're Basically, to the talk work through not all I'm summarize. going look and the do George, and Yes. we're I try entire to approach want up to of company.

So can company. paper our our those of the within and functions those our global business. support what and critical we've businesses we're are And identified call our flexibles we centralized businesses our businesses structuring integrated businesses, long-standing and core

manage category that to all On the businesses a disparate in other side, have of we going group we're other the differently.

We are not these. them from -- integrated. not they're of relationship going center. -- between no going lot They many to there's longer We're allow to to support a of

So we're alone savings going makes will by core supported those, again, It's as -- we more to going significant will sense on to when from to be center step is to But it focused SG&A that. focus we relates the and manage it a and stand how support fully the them a provide greater cost perspective. up much and result going that core be end or as be from core to businesses implement those to businesses.

different it may he company as heading of into would that to going managing Rodger how a and future. be the is have up well. is that make like he a totally to we're view So of the comments couple

Rodger Fuller

got as of Yes, be our we I operational productivity strong well, about a year. will on operators, talked covered lot focus give I'd really automation But lot has very amount that improve we've and hitting productivity. George, do we've maintenance it data through this you Howard. add, teams and think next online technology you going capital a how projects year. tremendous automation know, been And A tough to better our of

chain fantastic challenges. and with a done has supply under very situation team difficult job the think labor challenges I

very well. is to bullish and feeling So unlocking that 'XX going be I'm that critical productivity about as very, in

as early projects pay as So off head into we'll those to see we well. start 'XX

George Staphos

to that saw And versus you 'XX, pickup more Howard, 'XX and in will the in be fair be would 'XX you what more incremental 'XX? that, it it say see would be clearly, than incrementally what than turn,

Rodger Fuller

correct. That's

George Staphos

could we're seeing it you can into third then me May into One, progressed the what I seeing of but in any others looking third not industrial you're that and And as quarter the And in consumer us you're takes. you share industrial I'll quarter question, puts some with for views Two and realize similar over. trajectory deep there's turn early terms that talk Okay. June. quarter? the about in that at

the progressed businesses well, cans important in Your then did the the obviously, take, and early quarter of businesses trajectory into my Any is flexibles. as and in XQ? change

Rodger Fuller

strength. Industrial, maintaining look On Rodger. as surprisingly, U.S. a is the George, at we good quarter, third the really

than look specialty, at film in and in you second tape cores strong business and we've had quarter. first strong And U.S. the strong. North a we the If little cores we tubes of part but into on results, and the very -- bit in textile, similar came trends paper in expect X.X% in downside July quarter, North seen continue U.S. of and positive, that the America in the the second mill America

seeing kind speak not slowing to So of we're really any of.

As you would expect, specifically was in Europe difficult. and Asia China,

exited Our were but core We a a Saudi about down had profit plant Europe -- exit. we in numbers We've plant Arabia. exited tube losing the X% France. losing and Russia in in

So really making moves. smart we're

You and that there. the in and European that softness about seeing is is we're X%. generated textile was and supply business of textiles the disruptions coming really war Most by chain from Ukraine the down take out that

was China. overall by that's weak Asia, driven and

China, was XX% down our example, business textile an cone As focused, year-over-year. is which

So China was soft.

incremental move me, we're quarter, we that other than the as may second second similar challenges quarter. see into Europe seeing the in the So very in we for energy trends

is into optimistic holding changes business. Canada piece that quarter the most really the U.S. as is third rolled our No piece in well. which So significant up we can

formula infant That rebound seeing now. business. behind infant our in us a to formula one business. of are There's challenge be in well-publicized the powdered large a with our customers seems We powdered

been our And paper softer Yes, has the in in North second talking should four we than consolidations guidance. seasonally, or is now business volume some choice. from strategy plant Rob business, first. was can in half doing metal the call about food it pricing but the So the business down be away the quarters for have it down our plastic We've that by we've to we're can stronger. business. that the and mentioned, American already I really, in our business. consolidation, That's walked three want was unprofitable

in but a had performance. So the foods profit down plastic they volume was record

So I'll time. at take tradeoff that any

So third and really watchout, focused the that's as quarter not energy, energy in really, availability the the is a only of only significant change quarter. Germany, seeing energy price get but specifically we into we're of

Operator

question Our Seaport line the next comes Weintraub from Research Partners. Mark from of

Mark Weintraub

the good quarter. for And onetime helped Another if be quarter what's pulling -- One in the to $X.XX would out to from be? for also is second laying be think thank you're a drive number equivalent quarter $X.XX $X.XX we you XXXX, going the right second really you're first been where Was $X.XX much, some you quasi thinking as there to you going should thing first to noted number going out quarter to of about about about that levers any, there that to had profits you the the there that the of talked be platform controllables price to with Is quarter? forward. the us cost. start that had kind in starting the in

Howard Coker

really for to $X.XX the in saw divisions, $X.XX probably several benefit. Mark, across quarter, Yes. that second we type

much the was pure. out so and And rest pretty that back you say can

But right the all headline. seen that in is great we XX we have in Your is question not tailwind a And that to to now planning perspective repeat of a next things as number from George lot I'm transformation. do there terms year. that structural the cycles you around we're because a really comp asked, haven't we going go, how

-- to repeat are expect year. poster investment. know, and you next range truly coming kick $XXX that us next capital going $XX largest-ever don't I and started XX, the like I'm been the last to to really kicking synergies that at that say, if from we've child those got in will that's number finally, acquisition drive all -- I things look see in and number capital are capital And spending then and XX, from million XX, type but we not meaningful such in going the in tailwinds up again, just, as But $X XX million, returns XX, because that that expect year We to XX-like XX, have start large $X And the a that increased well, it's our to year. with million spending million well. improvement the projects

about talked has And while to year, we [ph] X-XX $X.XX. work in because over to something we've one able -- you this team you $X.XX going that of So last to years. maintain guys the forward from great X-XX be the all whether that gone to expect undertaken the two

Mark Weintraub

you -- asking, been also folks bit. the little have down flat, I one question And a guess, were volumes

us a to kind as you if if less, you You essentially have the can sense plastic food called decisions made sort out remaining volumes like? looked what to possible give the it's -- to business of of to would put you the sell side where

Howard Coker

Yes. store that our where example sacrificing in was volume great a which business that strategic you profits. decisions our forward. and we that make And going smart impact don't haven't a down making higher we to can we do are you're start Rodger that something I for much you going consumer for X%. profits out was exchange And say ever think we is X% actually hit pointed that whatever, X% in but number that that can down it much, moves, we out is in had sector, pointing down. business, When perimeter had X%

that is That volumes just but of will here I actions a be are sit versus what coming recognizing sorry, is you that and down. "Here we be the picture self actually Mark, to a the future. total say, market-driven So own are our number," can't guys in we're causing not our giving

Operator

question from from Gregory Instructions] of Citigroup. line [Operator next Our the comes Andreopoulos

Gregory Andreopoulos

a question circling had to back of Greg the Anthony. that. on about kind year guide, quick I for just full

to the above would what of to $X.XX, preannounced implied. $X.XX my So have rate mind, that's the XQ

for back process above my April thought is when updated half in what they the are second you your last. So were expectations us

of kind questions. two my I related So guess

question costs First wanted of second in assumes I is and what how raise? year changed the April outlook kind of of year? it since half to of to gas guide full kind the inflation of the also, or has are July earlier know And parse rest And this for is, possible trending of out the of resin, guidance how some levels the just kind in of the since OCC, year. terms natural drivers

Howard Coker

Good Gregory. Yes, question.

then as mentioned, relatively from core in -- we is and performance on our guide as monitoring you and predicting about and monitoring of drivers it price kind thinking just in markets industrial, Howard of kind core And continue as real it takes feel Rodger understanding food, we actively both defensive the of and sequentially kind paper cans, markets cyclical the our paper increasing we're defensibility opportunities aren't kind we of kind And said, of of terms U.S. provide various there and meaningful and the and we how and and on be are, puts said markets really markets, of of In foods there. stability really a side. Rodger for are there able and good tube should those And downturn year to participating kind would flexibles the it in demand that and that that to but continue there's kind guide, about we're third, drivers. the metal first I there quarter like the as say and second really consumer thermoforming the rigid really quarter, our strong.

of year normalized will expansion material from kind kind this some of -- I be the And as normalize profitability the that that half the all full where I point the year would a driver remainder But year $XXX focused the where which mean think full neutral -- that result, component the unique that we're value. year range not be price/cost for of we revert here price/cost be seasonality first the that's should pricing we we lot of million and that margin for expecting that in that million is saw that and component really And around for the of this continually and earnings one range really remains a in we're big we've say we've driver $XXX the year. meaningful second think will to to pretty margins want of for XX% to is And would I that profitability been margins was the on to price/cost. the does quarter. think that of the has a current $XXX rest the and oscillating profitability that metal guide this the really of this will kind have year. kind a packaging on the gotten year, of I through million their think for make

Rodger Fuller

Rodger. this Yes, is

inflation quarter. second the On in the feel peaked side, we like inflation

diesel will up to there offset, said some feel challenges Now finally, easing obviously, truck but having freight some driver cost. chain that, be challenges continue availability, supply and do we in like seeing in inflation availability, we're

ingot. is XX% and to the buy, what There about like we resin of our -- pounds to about XX% But buy we going of PET aluminum in purchases looks to it like mind drop year. and to XX%. calling this We're the Sonoco we in really million quarter now for XX% are resin bought going things inflation escalate resin up XX% is a in -- but year, last up it's XXX and year. Some XX XX% PET keep we

-- and to that chain the mind. in the been view We've half and we bit to keep didn't that better But changes point of second a quarter, inflation know half, a easing know I helps second understand on you for the about, you with for precise. strategic So got we And in you've inflation. now. build the in got first point it challenges We've that didn't what supply pricing, the think little Rob's second in on the half. more guidance

Operator

White from next Deutsche the question Our comes of line Kyle from Bank.

Kyle White

going that paper see anything guess forward. the call and to curious more trade of start, foods, you down starting or I just Congrats, any to with you forward Rob, business more on maybe the food looking containers you cans rigid fresh would new if out? to versus guys kind are consumers overall across impacts, to working closely moving role

Howard Coker

that's be on seeing goods the only I the actually high-value supply -- are would industry, don't think and into dryers. refrigerators, parts the areas white within notable that the the we're portfolio business our washer, more of

foods Some issues substantial their recessionary telling fairly a own in side tick-up seeing and the us they're would staple our are normally is at seeing, some chain supply of that is of see period customers business. a that related to our what but not But we're pullbacks. this in point we

time. it's point So this in as of normal business kind at

Kyle White

from strategic buybacks? have That be you business, since regards what's your implement curious Or Sonoco changing Anything makes sense. you're looking in the capital already Rob, understanding to to you're about And just you here what new an of in allocation? kind on not day leverage to one. view thinking share then, of the and and actions might

Howard Coker

Yes. it's evaluating mean still I We're days. early that.

We've has shares consider grade what alternatives capital served with every certainly thinking to we really and but like the that for dividend are. a are think about really bought the capital shareholders quarter well. through I and practices we returning think what dedication the past and definitely and that Board. have that the structure investment doing strategic We us back to the means about legacy being in the thoughtfully

Operator

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

Adam Josephson

company's year. $XXX the expectation One, with cost, Rob, the for million of coming to you congratulations. was memory updated you to gave into $XXX price forward I that look benefit others plus. expectation your the have the on XXX working If as Rob, said. million serves, year

magnitude historically. the full the compared company beginning you the than which of And it's segments has for more gone in? frame the year. me since it's experienced us -- Can to that with benefit price/cost of year what help So doubled just that's up

Howard Coker

that's Adam, a context. on. it if it's Yes, about a historical I focused you think good question we're and really in something mean

in experienced to this were back Over year, $XXX the we've two million. positive $XXX. of last And half of price negative the we first cost years,

was So just how to two really about and receive way deliver would offsetting our what working and years in year, to the really way on whole right really two I customers value in been value say a years that for of the and thinking this really strategic a getting right that, trend. we're delivering. we've price negative

and really changed include lot period we a that price/cost year about curve how think the that over how get $XXX good price three years. to we about you thinking the done last $XXX million driver show about that's actually just margin. that last if for That's work the And years, of think the of this if million, we've to two over will you're so just you how think we the the couple

focused we've about that that. feel capability for confident gotten we've a and really been number a one It's So we years of on. building increasingly

capability the and that is board, every There price. is business center there, or talk really seeing just price we're businesses of I that experiencing puts takes. a Rodger and would from of that are price. here it's can pushing core a I it's better one some across more think the there's we're about bit no seeing say, pricing. But little mean definitely I pocket

Rodger Fuller

Yes. said, That's well Rob.

only about would is months XX the I it or Adam, now more. for thing I think talked we've add,

price to months, through resin pricing like the two recover all should customers can the labor mechanism industrial, other going be things with importantly, correct metals. is price all as all platform OCC and materials initiative mechanism. and up we change primarily and besides The using really on change we and consumer most environment mechanisms But those making understanding across and contracts sure over the in all businesses the our the really other increases increases, able and last timing XX

job. said, done a Rob So I team think has as fantastic the

to and half I you're the that in continue continuing see that's of of we second of most the out forward year. the push we driver think the that and incremental calling that going

Howard Coker

when add it's rare. of helped really doing forward make a takes material of chain and value we so raw customers to to it customers' for have where we we the stay period, understanding supply a COVID company that would that we too, business our global like for in global shortage are And really mind of during materially the whatever actually situations. can't it literally, are terms improvement. discrete for our willing just our and of market think one that think do in downtime margin that being sure value that think we're to And I I customer with caused deliver that rewarded I to difficult And pull have recognition they, and Sonoco have these long. the reach I

Adam Josephson

everybody. and Howard that, appreciate I No,

on one that. Just clarification

Is recent about plus be that this Is the that first year half because I you're perhaps drag of in all a half. more -- large years that underpricing thinking despite to be recouped to what in lot don't expecting had then cost price benefit. you're think that effect and past what past get saying, think the in two But recouped lost you'll us over in you issue? half? you're, think in going response that you historically in in two first years, the you So appears you over that Howard, then second a years, Cleve's question, effect, overearning the how were just you would were have you the you you to

Howard Coker

our in to just we're cost, reinforced business that message our has to just of are partner excellence been. And nothing the look, mean, has we've business right X how -- be talked world, terms It's a commercial we to working that customers our it for years making sure as a and X.X be Rodger getting with the with major is It's because, business to, we this are recession. our is doing folks think years, absolutely And COVID recognition understanding higher we them That it. out. than have right? in is -- really right we at ever doing been look, so price that today with. customers that I about doing to with value And keep perfect do Sonoco

of like not in coming, it's it I we weeks, We a literally supply it's happen -- hurricane a don't have chain that can that coming. issues. global matter have a but

be going may Our but there customers it short-term a are our P&L cost. know will them. to keep to impact them we serve whatever we supply that to in at be And

Adam Josephson

near sensitivity back hold would Can was that that the And confidence very business a other you just 'XX hit more that? it business of just the business economic know term, remind the which saw 'XX, in industry big of than up. you What URB end differently of terms cores on then. you differently demand lot and gives 'XX in in And that matter North you profitability. then in volume-wise. think, the expressed volume And and given took much one 'XX, that. American business those than particularly appreciate obviously Rob, -- about that confidence that what I given us a tubes I is one the think for markets, I you both

Howard Coker

supply. period Look, mill level. keep to tight a our through customers it's trade -- and that. Okay. been around, going number already. to And Well, very we've to up. on, of number here where going mill negative let short that ourselves we've to just the I'm we'll looking moving we quarter-after-quarter to we'll that allocations. start. on, who's market. back terms is see to seen still answer come I'll I see of inventories mean, relief, With to shortness balance we've talked this We've that? get XX been over, add the volume hopefully appropriate from -- to hope XX mill changing get productivity and me Look, coming in our the productivity about inventories up

that improve that of overall to So And our enjoyed. will margins we substantially. think sustain type market set just we've productivity conditions are the

Rodger Fuller

And Adam, it's Rodger.

you to think -- Project have Horizon. I back before go

into our If dollars of tens put of system. we've millions investments mill capital you remember, paper of

Project leading And aggressively continued the after recession And several to continue the for and build Focusing with up high-cost is just our on we'll that. machines capacity -- to years, lowest cost out Horizon. Project and that. for going expanding that of Horizon then on capacity our taking

not URB. in make last investment is Horizon we'll Project So the

is keeping our -- that's We've whole basically going commitment the So and what that's URB our to we've committed doing lower our system, and system capacity cost. been forward. much flat

market a opinion. in was 'XX really in So back and today 'XX, different my it it's than

Operator

to back conference [Operator like turn remarks. to Instructions] I the would over closing Lisa now Weeks for

Lisa Weeks

for joining thank today in our again and you you your call for Sonoco. Thank interest

please to questions, a call us hesitate of follow-up rest If don't your and enjoy day. you the have any give

Operator

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

now You may disconnect.

Sonoco Products (SON) 21 Jul 222022 Q2 Earnings call transcript