Good day, and thank you for standing by. Welcome to the Q2 2024 Sonoco Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and thanks to everyone for joining us today for Sonoco's second quarter earnings call. Last evening, we issued a news release highlighting our financial performance for the second quarter, and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at sonoco.com. As a reminder, today’s call, we will discuss a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Please take a moment to review the forward-looking statements on Page 2 of the presentation. Additionally, today’s presentation includes the use of non-GAAP financial measures, which management believes provide useful information to investors about the company's financial condition and results of operations. Further information about the company’s use of non-GAAP financial measures, including definitions as well as reconciliations to GAAP measures is available under the Investor Relations section of our website. Joining me this morning are Howard Coker, President and CEO; Rob Dillard, Chief Financial Officer; and Rodger Fuller, Chief Operating Officer. For today’s call, we will have prepared remarks regarding our results for the quarter and our outlook for the third quarter followed by a question-and-answer session. If you will please turn to Page 5 in our presentation, I will now turn the call over to our CEO, Howard Coker for a business update.

Thank you, Lisa. Good morning, everyone, and thank you for joining our call today. As we announced late yesterday, we had a solid quarter, where we delivered sequential improvement in adjusted EBITDA and additional growth. In the second quarter, sales were $1.6 billion, adjusted EBITDA was $262 million and EBITDA margins remained strong at 16%. Our adjusted earnings per share were $1.28 and operating cash flow was $109 million. These results reflect improved industrial volumes on a year-over-year basis, combined with some continued softness in consumer sales. During the quarter, we faced price-cost headwinds across the portfolio, primarily in industrials, which we believe will improve in the second half. Productivity in the second quarter came in at $51 million, continuing on our strong operating trends and bringing our first half productivity total to just over $100 million. All in all, another good quarter from the Sonoco team. If you’ll please turn to Page 6. Let me now update you on recent progress with our near-term strategic priorities. As always, we're fully committed to operating with discipline. Our productivity results in the first half of the year were over $100 million, ahead of our expectations for the year, and were not by chance. We have doubled internal CapEx in the last three years, targeting value-driven growth and productivity projects. We continue to make high-return investments to drive better and more efficient manufacturing processes, and those investments are paying off. Our actions to improve productivity through optimal capital allocation, portfolio simplification and strong expense management continue to yield results, and I couldn’t be more pleased with the efforts from the entire Sonoco team. We also continue to invest strategic capital and innovation to support organic growth and sustainability initiatives. At the recent environmental packaging live event, we were awarded the 2024 Gold Award in snacks and confectionery packaging and the Silver Award for sustainable packaging innovation for a greater than 90% paper Pringles Canvas. We're delighted to be recognized for our proprietary designs that help our customers achieve their sustainability packaging goals. This new design is being rolled out on store shelves across Europe and will be launched internationally in the near future. Regarding high-return capital investments, we're pleased to announce the acquisition of Eviosys in late June, representing an important milestone in our strategy to scale our Can Packaging platform. The approval and review processes are well underway, and Rodger and team are making great progress on planning for a seamless integration. Following the current schedule, we expect to close the transaction in the fourth quarter of 2024. If you’ll turn to Page 7, with the Eviosys deal, we're excited to expand our footprint and global capabilities to address the increased demand for innovation and meet growing expectations for the highest levels of customer service. The addition of Eviosys will position us as one of the leading Food Can and Aerosol Packaging manufacturers globally, and it represents a platform from which we can drive differentiated value in the market by leaning into service, quality and innovation, the absolute hallmark of successful Sonoco businesses. The combination of our existing innovations infrastructure and Eviosys’ technical advancements and well-invested manufacturing footprint will help us more effectively serve both existing and new customers. We’ve initially identified meaningful near-term operating and procurement synergies that should drive roughly $100 million annually, not including expected commercial and innovation synergies. The financial profile of this combination is compelling. The transaction will be immediately accretive to earnings and cash flow, and first year returns are expected to be well in excess of our cost of capital. But most importantly, it gives us a powerful operating platform from which to advance both commercial and operational improvements, helping us to continue to drive sustainable value and returns to our shareholders, further demonstrating the strength of our clear and dynamic capital allocation process. Our businesses continue to identify and bring forward exciting opportunities for value-generating investments. The clarity of our dynamic process will continue to support these opportunities where Sonoco can generate the strongest return and value proposition for shareholders. You'll see us continue to distance ourselves from businesses that do not regularly offer the same opportunities. We view capital allocation as a part of our strategic planning process to generate increased value for our shareholders, and we’ll keep you fully posted on our progress. With that update, I'm going to turn it over to Rob to talk about financials for the quarter. Rob?

Thanks, Howard. I'm pleased to present the second quarter 2024 financial results, starting on Page 9 of this presentation. Please note that all results are on an adjusted basis and all growth metrics are year-over-year unless otherwise stated. The GAAP to non-GAAP EPS reconciliation is in the appendix of this presentation as well as in the press release. As Howard mentioned, we continue to deliver resilient financial results through our enduring operating model and strong market positions. Adjusted EPS was $1.28, which was within our guidance range and exceeded the consensus analyst estimates. This result was driven by positive productivity of $0.38 per share and positive volume mix of $0.09 per share, offset by negative price-cost of $0.37 per share. Sequentially, we drove 14% EPS growth through $0.05 of volume mix, $0.11 of price/cost and $0.08 of productivity, which was partially offset by $0.11 of specific other costs. For the quarter, net sales decreased 4.8% to $1.62 billion due to negative contractual resets and pricing, and negative $101 million of strategic actions to exit or divest nonstrategic positions. Excluding these strategic actions, net sales would have grown 1.1%. We believe that divesting the Protective Solutions business, exiting nonprofitable thermoforming markets, and reclassifying the recycling business increase our ability to focus and execute our strategy. It's notable that volume mix grew low single digits in the quarter as low single-digit volume increases in consumer and double-digit volume increases in industrial overcame declines in all other segments. We continue to experience negative contractual resets and pricing pressures as paper, metal, and some resin benchmarks have declined from their peak. In the quarter, pricing impacted sales negatively by $32 million. We anticipate that year-over-year price comparisons will improve as the year progresses. Adjusted EBITDA was $262 million, and the adjusted EBITDA margin was 16.2%. The specific other expenses that we believe are one-time in nature were higher by $23 million due to increased employee expenses, bad debt reserves, and other accruals. For a year-over-year comparable EBITDA margin would have been 17.6% excluding these specific other expenses. This gives us conviction in our expectation that EBITDA margins will improve in Q3 as we expect volume mix and productivity to improve. In the second quarter, we achieved historically strong profitability through improving volume mix and strong productivity despite challenging price-cost conditions. From an EBITDA perspective, volume mix was positive $5 million in the quarter. This was the first positive organic volume mix for EBITDA in 8 quarters. Productivity was positive $51 million in the quarter. In the last 12 months, we have achieved over $180 million of productivity. We believe that this performance is an indication that our strategy of investing to drive earnings growth through productivity is working, and we anticipate that this trend of positive productivity will continue. Price-cost was negative $49 million primarily due to industrial. We anticipate the price-cost conditions will improve as the year progresses. Page 10 has our consumer segment results. Our consumer businesses continue to improve profitability through productivity and commercial execution despite uneven volume. Demand is improving, but promotions at retail have yet to stimulate demand to legacy trends across all sectors. Consumer net sales decreased 4% to $928 million. Consumer volume mix increased low single digits due to the Inapel acquisition and positive organic volume mix in flexibles and metal packaging. Consumer pricing decreased 2% due to contractual price resets. We expect these pricing trends to continue for the remainder of the year. Consumer EBITDA increased 11% to $148 million, primarily due to improved productivity. Our capital investments in consumer are generating meaningful results, and the first sequence of investments from 1 to 2 years ago was a primary driver for the improvement in productivity to $25 million. Consumer EBITDA margin increased 216 basis points to 15.9%. We anticipate that EBITDA margins will increase in Q3 as volumes continue to normalize and metal packaging enters its primary pack season. On a more granular level, RPC sales declined low single digits due to low single-digit volume mix decline. We anticipate that this will continue through the balance of the year, and we are taking appropriate actions to ensure profitability. The FP sales decreased mid-single digits as positive mid-single-digit organic volumes in flexibles and strong acquisition performance from Inapel partially offset the impact of exiting a nonprofitable thermoforming market. Metal packaging sales decreased mid-single digits as positive low single-digit volume mix was offset by negative contractual price resets. Volume mix was positive in both food and aerosols. We expect metal packaging volume mix to increase double digits in the third quarter. Volume was up mid-single digits, excluding one-time customer reserves in Q2. While metal packaging price was negative on a sales basis, on an EBITDA basis, price/cost was meaningfully positive. We expect positive price/cost on an EBITDA basis in metal packaging for the remainder of the year. Page 11 has our industrial segment results. Industrial market conditions are improving. While we are optimistic, we believe that we are still in a U-shaped industrial market trend and that there has not yet been a broad-based market recovery. Industrial sales increased 3% to $601 million, with volume increasing 10% and organic volume mix increasing 2%. These results include the reclassification of recycling, which reduced sales by $23 million in the quarter. Adjusted for the impact of recycling and reclassification, industrial sales would have increased 7%. Industrial pricing decreased 2% due to contractual price resets. Industrial EBITDA was $98 million due to $47 million of negative price costs, offsetting $23 million of productivity and $15 million of positive volume mix. Between 2019 and the end of 2023, industrial price costs increased $184 million. Year-to-date in 2024, industrial price costs have decreased $102 million. We believe that we are now close to a balanced price-cost position and that future trends will be positive based on strategic pricing. We believe that this is evidence that our pricing strategy in industrial is working, and we expect price-cost to trend positively over the long run. We continue to seek market price increases to offset higher OCC and other inflationary inputs. We anticipate paper benchmarks will accurately reflect the inflationary environment and improving market conditions in the second half of the year. Industrial EBITDA margin was 16.3%. We believe that industrial margins will continue to improve with volume recovery and future pricing actions. Page 12 has our results for all other businesses. All other sales were $95 million due to volume mix declines and the sale of the protective solutions business. All other EBITDA was $17 million due to lower volume mix and negative price costs offsetting $3 million of productivity. Moving to Page 13. Our capital allocation framework aligns with our business strategy to drive value creation through earnings growth and margin improvement. The 4 pillars of our capital allocation model are capital investment to drive growth and improve profitability, dividend increases to reward shareholders, programmatic M&A to action portfolio strategy, and share repurchases to return capital and maximize shareholder value. Our goal is to be the most disciplined deployer of capital in our industry and to drive the highest ROIC and strong cash conversion while also returning capital to shareholders. To achieve this goal, we remain focused on our dynamic capital allocation strategy. We believe that this strategy is working and that the productivity results we are generating and the growth we anticipate are indications of that success. As Howard mentioned, our long-range planning and capital allocation process continues to yield great results. We have a meaningful number of highly strategic, high-return capital opportunities, primarily in our RPC and metal packaging businesses. As we evaluate these opportunities, we will tighten our focus on fewer bigger businesses. As a result, we are planning to expand our divestiture program. We believe that we have the potential to yield more proceeds from divestitures in the next 12 to 18 months than the previously expected $1 billion. As previously communicated, we believe that we have a strong base plan to finance the Eviosys acquisition, which we anticipate will close in the fourth quarter. We believe that expanding our divestiture program has the potential to further accelerate our portfolio simplification strategy, improve our pro forma leverage and increase shareholder value. As always, we are being disciplined in our strategic activity, and we expect to provide further updates as our plans progress. On Page 14, we have our cash flow performance for the quarter. In the second quarter, we generated operating cash flow of $109 million. Capital expenditures were $93 million for the quarter. We're on track with all major initiatives and anticipate investing between $350 million and $375 million in 2024. Over the past few years, we've updated our capital allocation process to focus on strategic, high-return value-adding projects. As we improve this process, we are allocating an increasing amount of capital to value-adding projects versus value-maintaining projects. We anticipate that this capital efficiency will enable us to maintain this level of capital investment even as we increase our scale. Turning to Page 15. The foundation of our value creation strategy is disciplined management of our investment-grade balance sheet. This strategy provides Sonoco with incredible access to capital, strong liquidity, and low cost. In the second quarter, we had over $1.4 billion of liquidity, a weighted average maturity of 6.8 years, and a weighted average cost of debt of 3.9%. We repaid $75 million of debt in the quarter and reduced net debt to adjusted EBITDA to 2.8 times. On Page 16, here’s our guidance for Q3 2024. Guidance for Q3 2024 adjusted EPS is $1.40 to $1.60. We expect consumer volumes to remain on trend in Q3 and expect year-over-year volumes to increase due to acquisitions and improvements in metal packaging. We expect industrial volumes to improve in Q3 as we are experiencing improved order rates and backlogs, especially in the North American paper markets. However, we are not yet anticipating a robust recovery. Industrial price trends are expected to improve and price-cost is expected to improve sequentially. OCC is expected to remain flat in the quarter, and hand-bending chip index is expected to reflect market increases later in the second half of 2024. We are reaffirming our guidance for full year 2024 adjusted EPS of $5 to $5.30. Similarly, we are reaffirming our full year 2024 adjusted EBITDA guidance to $1.05 billion to $1.09 billion, and our operating cash flow guidance of $650 million to $750 million. Now Rodger will further discuss the outlook for the business.

Thanks, Rob. Please turn to Page 17 for a review of segment performance drivers for the third quarter of 2024. In the consumer segment, we expect sales to increase both sequentially and year-over-year. Our metal packaging business is performing well, with sales anticipated to rise sequentially and year-over-year. Sales of Food Cans are solid as we enter the packaging season for fresh vegetables, and Aerosol sales are strong due to improving demand for household products after last year's destocking. We continue to monitor supply issues based on domestic constraints and tariff uncertainties, but our team is effectively supporting our customers through strategic purchasing. In rigid paper containers, we see a slight year-over-year increase in sales with some improvement in North America, driven by snacks and other discretionary food products. We believe lean inventories and high shelf prices are suppressing consumer purchases, and we are looking forward to promotions that can stimulate higher volumes. As Howard mentioned earlier, we are committed to investing and innovating to meet our customers' sustainable packaging goals and have a multiyear pipeline of opportunities to support future growth in rigid paper cans. In our thermoform flexible packaging business, we expect sales to remain flat sequentially but increase year-over-year. Organic volume is solid, and total volume benefits from the Inapel acquisition in Brazil, which continues to exceed our expectations. We are still in the early stages of integrating our flexibles and thermoforming businesses and see ongoing opportunities and synergies for these businesses going forward. In total, for the consumer segment compared to the same quarter last year, we expect organic volumes to increase mid-single digits, pricing impact to be slightly negative year-over-year, and anticipate continued productivity improvements across all consumer businesses. In industrial, we anticipate flat sequential sales from last year and growth year-over-year driven by organic volume increases and acquisitions. Our North American paper business, supporting tissue and tile consumer end markets, remains strong. Capacity utilization in our North American paper operations will stay above 90% in the third quarter. This is also true for our North American converting businesses, where year-over-year volumes have increased due to higher demand in our tubes and core businesses for the film industry, supported by both consumer and industrial markets. As Rob mentioned earlier, while there isn't a robust recovery, volume levels have improved from the low levels we encountered last year. Pricing impacts on industrial profitability are less significant compared to the first half of 2024, although there is still a year-over-year drag due to higher input costs for raw materials and labor that have not been fully offset by our price increases. However, we expect that contracted price adjustments will reflect better pricing in the second half of the year. Similar to the consumer segment, we anticipate positive productivity across all industrial businesses in the third quarter, and total industrial volumes are expected to increase low single digits compared to last year. Other sales will decline year-over-year following the sale of our protective solutions business, though we expect sequential sales growth from higher seasonal volumes in our temperature-assured packaging business. Year-over-year margin improvements are also anticipated due to a better mix and increased profitability. Our teams continue to excel in productivity, as demonstrated by our first half 2024 results. As Howard highlighted earlier, our targeted investments in value-creating capital over the past few years are yielding results. These investments, paired with effective cost management and a strong focus on continuous improvement throughout the organization, have contributed to our exceptional productivity performance. I want to echo Howard and Rob's gratitude by thanking the entire organization for these results. With that, Howard, back to you.

Great. Thanks, Rodger. In closing, on Page 18, I just want to take a moment to remind everyone of the plans we laid out to deliver long-term shareholder value. At our Investor Day earlier this year, we provided our outlook over the next five years targeting adjusted EBITDA of $1.5 billion with high teens EBITDA margins. We're expecting to generate cumulative operating cash flow of $4 billion to $5 billion, all while we remain committed to growing and paying a competitive dividend. We are in full execution mode of our next era enterprise strategy. With the highly strategic Eviosys transaction, we expect to deliver results in excess of these targets. We're building a stronger portfolio that delivers greater value, simplifying the company, and unifying our global operating model to improve financial results while maintaining our disciplined capital structure. So I am really looking forward to what’s next for Sonoco. And with that, operator, we'd be happy to take any calls or questions.

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

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

Our position at this point is to talk about specific businesses that we're targeting. Our thought processes have evolved as we look at the materiality of the current acquisition transaction. It really allows us to take a look at two things: one is to pull forward on the simplification strategy where we have yet to define to you exactly what we're looking at. I know you're trying to get to that, but we will be bringing that to you in the very near future. But it gives us the opportunity to move forward with the simplification strategy and improve the capital structure of the company more quickly than originally thought. So more to come on that side, and I will pass it on to Rob on the ROIC question.

Thanks, George. From a ROIC perspective, we're really excited about this capital allocation program and the initial results we’re getting. It's given us a lot of conviction to really move forward with the strategy from a portfolio perspective. We're starting now at above 11%, which we feel is a strong ROIC but one that we can definitely improve. We don't have a specific goal, but I would tell you that the focus businesses in our portfolio have over 20% ROIC. We're investing with expectations that the ROIC of our investments will exceed that, and we feel really good that we'll be able to meet those expectations.

One moment for our next question, which comes from Ghansham Panjabi. One moment.

On the consumer business, could you provide a bit more color on the step function and productivity that you generated in Q2, which I think was $25 million for the segment versus 15% in Q1? What drove that differential because that was obviously the biggest component of your margin increase? And then second, in terms of the outlook for consumer, I think you said mid-single-digit growth in the back half of the year. Is that purely a function of easier comparisons, the lapping of inventory destocking, or just a directional increase in promotional activity? What's behind those numbers?

The tremendous amount of our capital is focused on generating incremental capacity out of our baseline. Automation is a huge effort for our consumer businesses. We have a backlog of automation projects for the company extending until the end of 2025. We are also focusing on cost control and optimizing our footprint, with several consolidations. You add that to improving volume, as we noted back in February, when we laid out $300 million to $500 million of productivity over the planning period averaging about $100 million a year. Obviously, we're ahead of that pace. We said at that time, improving volume would help us push towards the high end of that range. It's across the company, not just consumer, but yes, very strong. It was manufacturing productivity driven by the plants on a day-to-day basis.

Thank you. Our next question should come from Mark Weintraub of Seaport Research Partners. Your line is open.

So just following up on the expanded divestiture program, does that potentially have implications for the plan to issue up to $500 million of equity? And then second, on rigid paper containers, I know you’ve been very optimistic about the business 6 months, 12 months ago, and I thought there were certain opportunities you thought were going to materialize this year. Are those just delayed?

The divestitures won’t impact our capacity to raise the $500 million of equity if the value is right. Regarding our paper container business, it’s almost a discrete issue. We are working through the pricing dynamics with a couple of larger customers and getting those right. We see that as a short-term type of phenomenon when we talk about RPC and the amount of capital we have been putting towards that business.

If you look at the third quarter, there is actually strong growth in the rigid paper can business outside of North America. To build on what Howard said, this is really a North American issue and just waiting for volume to return to more normal levels.

And our next question will come from Gregory Andreopoulos of Citi. Your line is open.

On consumer, first, you spoke about a modest uptick in discretionary categories in the second quarter. I’m wondering if you've seen any other mix trends that suggest to you there's an underlying shift in consumer trends going on? Or any other mix items that you think are worth flagging? And then regarding productivity, year-to-date, you've achieved over $100 million. How do you think about the cadence of productivity versus the $300 million to $500 million that you guided to at the Investor Day for '24 to '28? Has your productivity come in above or below your expectations?

On the consumer volume, the only thing to highlight is that cocoa pricing and any chocolate-type products have been hit by significant inflation. We're starting to see improved demand versus same time last year, but it's really focused on North America. There hasn't been a big impact from promotions yet, but we're expecting that to change moving into the second half of the year.

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

I want to ask about paper price. Last quarter, when you spoke about this, you were constructive on the February increase that was reflected in the index shortly thereafter. What are you seeing in the recently announced price increase? Are you seeing that reflected in open market contracts, and how are demand and backlogs trending compared to the environment last quarter?

It’s fairly similar to what we discussed previously. We saw improved capacity utilization in our North American paper mills. FPA published the latest results for the second quarter, where backlogs continue to be solid. We expect some of the pricing increases to come through in the second half of the year, but we didn’t build it into our guidance. As such, if it does show up in the coming months, it might have a more significant impact on 2025.

In regard to maintaining your investment grade, could you provide some minimum leverage number or benchmark over the next 24 months that you think you need to achieve in order to maintain that investment-grade rating?

There is no bright line in terms of leverage for investment-grade ratings. We have constructive dialogues with both S&P and Moody's. They feel very comfortable with our financing plan for Eviosys, and we’re continually thinking about shareholder-friendly ways to improve that financing plan. We think that revolves around advancing our strategy and also managing our portfolio actively.

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

Thank you all for joining us today and our sincere apologies for the technical difficulties. We will certainly follow up on that for future improvement. If you have any follow-up questions, please contact me, and we will be happy to set up a follow-up discussion. We look forward to providing further business updates on our progress in the coming weeks and months. Thank you all again, and have a great day.

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