Thank you for standing by. And welcome to the Sonoco Products Company Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. On keypad, if you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Roger Schrum, Interim Head of Investor Relations and Communications. You may begin.

Thank you, Rob, and good morning, everyone. Yesterday evening, we issued a news release and posted an investor presentation that reviews Sonoco Products Company's fourth quarter and full year results, along with our 2025 guidance. Both are posted on the investor relations section of our website at sonoco.com. A replay of today's conference call will be available on our website, and we'll post a transcript later this week. If you would turn to slide two, I would remind you that during today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operation. 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. Finally, references to certain financial metrics along with corresponding year-over-year comparable results made on this call are on a full company basis except when specifically referred to for continuing operations or for discontinued operations. Joining me this morning are Howard Coker, President and CEO, Rodger Fuller, Chief Operating Officer, and Jerry Cheatham, Interim Chief Financial Officer. For today's call, we will have prepared remarks followed by Q&A. If you will turn to slide four in our presentation, I will now turn the call over to Howard.

Thank you, Roger. Welcome back. 2024 was a milestone year for Sonoco Products Company as we created global leadership in sustainable metal packaging following the December 4th acquisition of Eviosus, Europe's leading food cans and enclosure manufacturer. As slide five shows, we jump-started the integration process with day one celebrations with large groups of employees at several Eviosus facilities. Our teams are now deep in the process of integrating into Sonoco Metal Packaging EMEA and achieving our two-year $100 million synergy target. Also, on December 18th, we further transformed our portfolio through the announced divestiture of our thermoform and flexible packaging business, Tophan Holdings, for approximately $1.8 billion. We're on track to complete the sale during the second quarter, having now received approval from regulators in the US, Brazil, and the UK. We're continuing a strategic review of our remaining cold chain temperature-controlled packaging business to further focus on our metal and paper packaging, consumer, and industrial businesses. Moving to slide six, you see the key results for the fourth quarter. Despite persistent price cost headwinds and the impact of two hurricanes earlier in the quarter, our team stayed focused on driving solid operating results. Jerry will provide the details and drivers for the quarter, but adjusted earnings per share excluding Eviosus, which we did not project in our guidance, were within our expectation. Eviosus recorded a loss in December, and it was primarily due to interest expense that was incurred in operations that experienced the normal year-end holiday season slowdown. Rest assured, Eviosus is a highly profitable, high-quality asset, and results so far in 2025 are meeting our expectations. Overall, in the fourth quarter, Sonoco Products Company produced a 5% improvement in adjusted EBITDA, and adjusted EBITDA margin expanded to nearly 15%. For all of 2024, we achieved approximately $183 million in productivity savings, equally split between our consumer and industrial segments. As mentioned earlier, some of our operations were impacted by two hurricanes, which hit the Southeast United States in early fourth quarter, including our largest thermoforming facility in Florida, which had the roof destroyed by Hurricane Milton. Our employees went above and beyond to minimize downtime caused by the storms while at the same time taking time to volunteer in their communities to help with cleanup and recovery efforts. Finally, Sonoco Products Company generated a better-than-expected $834 million in operating cash flow and $456 million in free cash flow. This was the second-largest operating cash flow year by Sonoco Products Company, and we invested a record $378 million on capital projects focused on growth and productivity. Results from our multi-year "Invest in Ourselves" strategy are demonstrated through our improved productivity. Today's investments are more weighted towards growth. If you look at slide seven, you'll see where we're continuing to invest across our businesses, including expanding greenfield paper can production in Thailand, Mexico, and in the US. All of these projects are sponsored by customers and will increase organic sales over the next several years. And I should add, the Thailand facility is expected to become one of the world's largest paper can production sites when fully completed over the next few years. Also, we're recapitalizing pulp tube production for adhesives and sealants for our customers who are experiencing strong demand as contractors and homeowners repair their homes and businesses from unprecedented storms and fire-related damage. In metal packaging, we're adding capabilities to meet rising demand for aerosol cans in the US and wet pet food cans in both the US and Europe, along with customer-specific cap enclosures projects. And finally, our industrial paper products businesses are continuing to capture targeted growth opportunities and productivity projects in the US and Europe while we continue to focus on rightsizing select markets. Now that brief introduction, let me turn the call over to Jerry Cheatham, who took over the Interim CFO role in January and frankly is doing a great job. I won't go over Jerry's impressive resume, but I've worked with Jerry for most of my career, including when I headed Sonoco Products Company's industrial segment and Jerry served as the group's financial leader. Jerry knows our operations extremely well, and he has the trust and respect of our global finance organization. Jerry, welcome, and please take us through the numbers.

Thanks, Howard. I'm pleased to present the fourth quarter financial results starting on page nine of the presentation. Please note that the results are on an adjusted basis and all growth metrics are on a year-over-year basis unless otherwise stated. The GAAP to non-GAAP EPS reconciliation is in the appendix of the presentation as well as in the press release. As Howard said, 2024 was a milestone year for Sonoco Products Company. We made significant progress on our strategy of fewer, bigger businesses that will enable more focused investments to drive value creation through earnings growth and margin improvement. We are confident and excited about the future and expect the leading global market positions of our two core businesses to drive greater efficiency and improve customer support. We grew adjusted EPS excluding Eviosus to $1.17, which was within the lower end of our guidance range. The negative $0.17 related to Eviosus consisted primarily of interest expense on the related transaction financing for the time period we owned the business in 2024. The 14.7% EPS improvement year-over-year was driven by strong performance despite strong operational performance and fixed cost reduction initiatives. Productivity was positive $41 million and marked the eighth consecutive quarter of year-over-year productivity improvement. This was further aided by low single-digit volume growth in the consumer and industrial segments and partially offset by the negative impact of price cost and lower volumes in all other businesses. Fourth quarter net sales increased 2% to $1.4 billion excluding discontinued operations of $297 million. This favorable change was driven by low single-digit volume gains and the impact of December sales from the Eviosus acquisition that was completed on December 4th. This was partially offset by reclassifying a recycling business as a procurement function, lower selling prices, and reduced volumes from actions to exit or divest non-strategic positions. Adjusted EBITDA of $247 million was up 5%, and adjusted EBITDA margins improved by 46 basis points to 14.9%. Page ten has our consumer segment results. On a continuing operations basis, consumer sales were up 18% due to the Eviosus acquisition and favorable volume mix. This was partially offset by lower selling prices. Eviosus contributed 27 days of sales in December that reflected their normal sales pattern of lower sales during the holiday period. Our global rigid containers and domestic metal packaging business both experienced low single-digit organic volume. Consumer adjusted EBITDA margins grew 9% year-over-year due to productivity and fixed cost reductions that were partially offset by negative price cost. Page eleven has our industrial segment results. Industrial sales decreased 4% to $571 million. These results reflect the reclassification of recycling, which reduced sales by $24 million during the quarter. We also completed the exit of our industrial operations in China during the quarter. Adjusting for those actions, industrial sales would have been up 2.7% year-over-year. Organic volumes increased by low single digits. Sales were also benefited by low single-digit improvements in selling prices due to index-based price resets. Adjusted EBITDA margins improved sequentially through the year and were up 250 basis points year-over-year in the fourth quarter driven by strong productivity. Adjusted EBITDA increased by $11 million to $102 million, representing a 12% increase. Page twelve has the results of our all other businesses. All other sales were $88 million, and adjusted EBITDA was $8 million. The sales and adjusted EBITDA results were negatively affected by the divestiture of Protective Solutions, a customer's new product launch in 2023 that did not repeat in our industrial plastic business, along with slowing sales from COVID vaccine distribution. Turning to page thirteen, we have our cash flow performance for the year. Strong operating performance drove operating cash flow generation of $834 million for the year. This was the second-best year on the heels of an $883 million record year performance in 2023. We invested $378 million for the year on capital projects to enable future growth and drive margin improvement. Now turning to page fourteen and looking ahead to 2025, our full-year guidance considers a full year of Eviosus and one full quarter of TFP. OCC is expected to average $100 for the year. We're expecting a stronger dollar in 2025 and an average effective tax rate of approximately 25%. The euro exchange rate is expected to average 1.055 for the year. Turning to the sales bridge on page fifteen, we're projecting sales to grow by 21.5% from $6.6 billion to approximately $8 billion, primarily due to the acquisition of Eviosus net of the TFP divestiture and organic growth in our legacy businesses. In consumer, we expect low single-digit organic growth, partially offset by negative index-based price resets. For the industrial segment, we also expect low single-digit organic volume growth and favorable price due to contractual resets with existing customers. Volume in the all other group of businesses is expected to be mixed with organic growth varying from low single digits to mid-teens. Slide sixteen provides the summary of our key drivers of our adjusted EPS guidance. We expect to deliver adjusted EPS growth in the range of 19% to 23% above the 2024 EPS of $5.06 that excludes the $0.17 from Eviosus in December. Earnings in our legacy businesses are expected to grow by approximately 10% driven by continued strong operating performance, productivity, organic growth, partially offset by negative price cost due to higher fixed and other expenses. The Eviosus acquisition is expected to be 25% accretive, and the TFP divestiture is expected to be dilutive in the range of 7% to 9%. These projected impacts reflect the associated earnings in 2025, net of the interest expense impact from the related financing and expected debt repayment. Non-operational expenses are expected to lower EPS between $0.25 to $0.30 due to a higher effective tax rate resulting from discrete items of 2024 that we do not expect to repeat. FX headwinds and higher net interest expense. Page seventeen presents our cash flow guidance key assumptions. We expect to have another strong year of operating cash flow performance in the range of $800 to $900 million and free cash flow between $450 to $550 million. We are targeting capital expenditures of approximately $300 million to drive growth and margin expansion opportunities. The ratio of capital spending as a percent of net sales is expected to be lower compared to 2024 due to a higher emphasis on debt repayment. We expect volume growth to lead to a use of net working capital of approximately $25 million. Now with that, I'll turn it back over to Howard for closing remarks.

Right. Thanks, Jerry. I'll now move to slide eighteen. Sonoco Products Company today is the global leader of value-added sustainable metal and fiber consumer and industrial packaging. It has become a simpler, stronger, and more sustainable company with products, technology, and market presence that positions us to consistently win in the marketplace. Since I was honored by our board of directors five years ago to become CEO, we've gone through a strategic transformation to remove complexity and build fewer, bigger businesses. That process has led us to divest below-margin display and packaging businesses and other smaller non-core assets. We moved away from resin-based businesses ranging from molded foam products for automobiles to plastic bottles and trays for food, beverage, and medical packaging. We did so because we found we could not achieve the necessary scale to consistently win in the marketplace. And we've leaned into our growing aerosol and cans along with caps and closures in the US and EMEA. But we now have assembled quality assets and strong market positions. For example, after purchasing Ball Metalpack in January 2022, we've driven greater than 10% annual growth in adjusted EBITDA and continued to find opportunities for growth. We believe we can achieve similar results with Eviosus and are projecting approximately 10% improvement in adjusted EBITDA for 2025. As mentioned earlier, another key tenet of our strategy is to invest in ourselves. As an example, over the past five years, we've made investments in our global paper can franchise that have resulted in sales growing by nearly 25%, particularly in emerging markets, and with all new paper cans that offer more market differentiation. Our iconic integrated URB industrial paper products business is the global leader of product technology unmatched by our competitors. Through continued investment and pruning of certain lower profit businesses and markets, we have grown EBITDA in North America by approximately 40% since 2020. And finally, the new Sonoco Products Company has become a cash-generating engine, producing approximately $1.7 billion in operating cash flow and $1 billion in free cash over the past two years. After investing in ourselves, our capital allocation strategy is focused on reducing leverage between 3 times to 3.3 times net debt to adjusted EBITDA by the end of 2026, utilizing proceeds from divestitures, asset sales, and our strong free cash flow. And finally, we expect to achieve an extraordinary 100 consecutive years of returning cash to our shareholders in the form of sector-leading dividends. Slide nineteen is a graphic representation of what the new Sonoco Products Company is expected to achieve in 2025, along with our businesses and served markets. We project sales will grow approximately 20% between $7.75 billion and $8 billion. Adjusted EBITDA is expected to grow approximately 30% to between $1.3 to $1.4 billion. The cash flow from operations will remain strong between $800 and $900 million. Finally, our mix of business is further shifting to more consumer markets, and our geographic reach will become more balanced around the world, with more than half of our sales still occurring in the United States. Looking forward, we believe our transformed portfolio of world-class consumer and industrial packaging businesses are well-positioned to serve the challenging changing needs of our diverse global customers. We're off to a solid start to 2025, and I believe our prospects for continued growth, margin improvement, and strong cash flow generation will continue to allow us to return greater value to our shareholders. With that, operator, we're ready to take any questions.

Thank you. We will now begin the question and answer session. If you would like to withdraw your questions, simply press star one again. Your first question comes from the line of George Staphos from Bank of America. Line is open.

Thanks. Good morning, everyone. Thanks for the details, Jerry, welcome. Roger, great to hear your voice again. Hope everybody's well. I guess can you talk a little bit about the exit rates or early first quarter rates, depending on perspective, that you're seeing across your most important businesses? Relatedly, can you talk about how Eviosus is doing relative to the original, I want to say, $430 million of EBITDA guidance on an annualized basis? And lastly, can you talk about how much you're expecting from TFP in the first quarter? Thanks. I might have a quick follow-on.

Sure, George. On the exit rates, the adjusted run rate for Eviosus looks like it's going to be around somewhere in the neighborhood of around $390 million for 2024. This is carried into 2025. Our expectation and plan is a 10% increase in that number, and that's what we've got built into our guidance. So far, we're seeing that type of a run rate. It's early with the month and a half behind us, but we're very bullish about the go-forward there. On the remainder of businesses, we've been seeing some sequential improvement, particularly on the metal can business here in North America. Slight improvements to flat on the paper can business coming out of December, and we've seen consecutive improvements particularly in North America on the industrial business quarter over quarter over the last three quarters. As we enter the New Year, we're uniquely positive about how we're starting things out. There's a lot of uncertainty with what's going on from a macro perspective, but we control what we can control.

Yeah. Just as it relates to expectations for TFP in the first quarter, we expect their first quarter 2024 performance to be similar to what we saw in Q4 2024.

Okay. So that would be roughly $20 million-ish, $25 million if I remember correctly from the slides. And then just maybe last question. Industrial, I recognize you're seeing sequential improvement. Was the business on plan with where you're expecting for the fourth quarter? It was somewhat below our forecast, which is neither here nor there, but just want to see, if there were any things in fourth quarter that were either positive or negative relative to your guidance. Thank you, and I'll turn it over.

Yeah. George, as far as industrial North America, we were very pleased with the fourth quarter. We've seen nice growth in our two core converting operations in North America, with the team doing a really nice job from a service and quality standpoint and winning some share, especially in the paper mill core area. Paper volumes, URB volumes in North America were basically flat, maybe just slightly up. We did see weakness outside of North America, and I think that's what you're seeing in the numbers, George. Europe continues to be very soft. We've got work to do there from a paper standpoint, from a capacity standpoint. We're working hard on that. As we talked about last quarter, we took a small paper machine out of Greece over the past two quarters, so we're looking hard at the European paper platform, and pricing in Europe continues to be difficult from a competitive situation. And in Asia, across the board, in our industrial businesses in Asia, volume is very soft. We exited China, so you're seeing some of that in the numbers. We've taken a small paper machine out of Indonesia. So frankly, the weakness is coming from outside North America. We're optimistic about North America. Price cost turned positive in North America in the fourth quarter, which was a very good sign. We see that continuing into the first quarter. So it's outside of North America where we're working hard to get costs aligned. We will see sequential improvement, but it'll take a little time as we run through 2025.

Okay. Thanks very much. I'll turn it over.

Your next question comes from the line of Anthony Pettinari from Citi. Line is open.

Good morning. This is actually Brian Bergmeier on for Anthony. Thank you for taking the question. My first question is just kind of from a high level. I think guidance kind of points to low single-digit volume growth in 2025. Just curious what that maybe implies specifically for consumer. We'd maybe consider that to be a little bit above peers or a little bit above maybe some of the blue-chip customers. So just curious what's driving that.

Yeah, Brian. If I just look at my charts here, we're really seeing it in the two main businesses left in consumer: the metals business in North America and the global paper can business. We saw aggregate solid, but low single-digit growth over the last year, quarter to quarter, actually strong in the low single digits for the full year. We're seeing a pickup in our global paper can business as well. Many of the capital projects, the new plants in Thailand, Mexico, and new lines in the US, some are in the early stages of startup and others will be starting up over a period of time. We're forecasting low single-digit growth driven by those areas.

Got it. Got it. Thanks for that detail. And then maybe just within your metal businesses, are you expecting maybe a better pack season in 2025? I think the North American pack was pretty weak last year. I'm curious if you think maybe you have a full recovery or a partial. I know you just said you're not forecasting anything major, but just specifically kind of thinking about North American metal. Thank you, and I'll turn it over.

I'd say slightly better. There were a few markets that were impacted, but we're holding in that low single-digit up. We're not forecasting any great recovery, but we like where we are from a share position, particularly on aerosols. We have visibility of exactly where that growth is coming from. If we have a great pack season, that's upside.

Your next question comes from the line of Matt Roberts from Raymond James. Your line is open.

Good morning, gentlemen. Thank you for taking the questions. If I could first follow up on George's question earlier. I understand there are certainly a lot of moving parts. Typically, you do guide one quarter ahead as well. So recognizing there are a lot of moving pieces, wondering if you could help frame EPS for first quarter a little bit better in terms of what you're expecting in terms of volume or any other bridge items there such as FX impacts or productivity and price costs? Thanks.

Matt, there are a lot of moving pieces. Because of that and the other moving pieces going on right now, discontinued operations and the TFP transaction, we've decided to go with an annual forecast and we'll update you on a quarter-by-quarter basis as we move through the year.

Very good. Thanks, Howard. And certainly understandable there. Maybe on ThermoSafe, I think it was recently in November you're expected to sign something there in the early half of 2025 and close that in the middle of the year. Have there been any changes in the thinking or timing there? I believe you noted volumes in the all other segment were negative exiting the year. We've heard some decelerate destocking has lingered in pharma and market. So maybe what are you seeing in terms of volumes in that business? And while ThermoSafe is included in the 2025 guide, are there any assumptions from ThermoSafe in the leverage target? It seems like that changed a bit from the less than 3x that you were thinking previously, 24 months after Eviosus.

On ThermoSafe, volumes were a little soft in the fourth quarter, and really that's an industry issue. Pharma sales have slowed some. We're optimistic about 2025, however. If you look at a number of key areas we're focused on, GLP-1 drugs is one of those. Last year, the supply of those drugs was so tight there was a very tight restriction on the number of GLP-1 drugs that could be shipped to doctor's offices for samples, and now some producers are shipping direct to consumer, which will positively impact our ThermoSafe business. A lot is going on in vaccines. COVID vaccines have slowed tremendously, which we all understand. But flu vaccines with the flu season we've had this year are expected to be very strong in 2025. There are new products like nasal mist for flu vaccine. We're still optimistic on ThermoSafe. We've not changed our expectations there. We expect the divestiture process to be completed by the end of the year. That's built into our deleveraging plan. The slowdown is an industry issue, but we've got specific areas that make us optimistic for 2025.

Thanks. And thank you all again.

Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Line is open.

Thank you. Two clarifications maybe. One, can you help us with the cash flow bridge from your EPS to your free cash flow per share because you have EPS, you know, $6 to $6.20, and then you also have CapEx lower than DD&A. Not a whole lot of working capital investment, but your free cash flow per share is a good bit lower than the EPS. If you could just help us out there, please.

I think probably what you're seeing there, first of all, in our cash flow guidance, it is reflecting a normal working capital profile. You'll probably see the impact of some higher interest expense and a higher effective tax rate pulling it down a little bit. Those would be the two items that may be giving you a little bit of trouble in reconciling that.

Okay. I'll circle back perhaps with you guys on that after. But, also, on metal overlap, is there anything of significance that we should be aware of that might be included in the guide one way or the other?

No, Mark. There really isn't. Pretty much flattish from a global perspective, so nothing material to talk about.

Okay. Great. And then lastly, on Eviosus, thanks for the specifics in terms of what you're expecting. Does the number you were using include synergies for 2025, or is that ten percent increase on the $390 million that excludes synergies?

Synergy-wise, we had anticipated that we would achieve a fairly significant percentage of synergies in year one. We did not expect that the UK authority, the CMA, would take a deep dive into this, so we were not able to close until the first week of December, which really put us on our heels in terms of negotiating annual contracts with our major suppliers. In fact, it became more about ensuring that we had the necessary raw materials to run the global business. Rather than the majority of the synergies coming in year one, we're estimating about a third of those synergies coming through in 2025, with the remainder flowing into 2026. So not a lot of synergies in 2025 relative to what we had originally anticipated, but we are extremely bullish on procurement and the longer-term integration opportunities and productivity through SG&A over the coming years.

I'll just add that synergies don't necessarily all fall within that result as well. There's a spread between the other industrial businesses in Europe and some of the metal business in the US. Those synergies are corporate-wide.

Okay. That's super helpful. Then maybe—and I apologize, I know I'm going a little long—just the shortfall last year at Eviosus relative to what you might have been originally anticipating. Anything specific you can point to?

There are a few items. They had some volume issues earlier in the year and some surprise cost issues. Transaction-related disruptions were a part of it. At the end of the day, as we noted, we're highly confident in the go-forward outlook of the business.

Your next question comes from the line of Mike Ruckson from Truist Securities. Your line is open.

Thanks very much for taking the questions, and congrats on all the progress. Just wanted to follow up. Roger, you mentioned European weakness in paper, and you noted how it needed work. Any way you could expound on that, provide some more color around what you're thinking about doing in Europe to improve this, or maybe just to continue to rationalize assets as you did in Greece?

Yeah. What I was referring to is similar to what we did in North America a number of years ago. We started the process of investing in our lowest-cost, best mills and taking out high-cost capacity and optimizing the network from the paper mill side. That's the work we need to do in Europe. We took a mill out of Greece and moved to get some unprofitable capacity out of the system, and we made a move in Ireland. We need a hard focus on where we should be providing URB in Europe and whether we can be more competitive. We're accelerating that. It takes time and in some cases it takes capital, which we're working through.

Is that something we should expect will be largely done this year as well, so that when you look at 2026 you'll see the benefits?

That's in the guidance and we're confident around that. You'll see more moves around capacity in Europe this year. I think you'll see improvements this year, and they'll flow into 2026. We're actively working on it as we speak.

Perfect. Great. And then just one quick follow-up on Eviosus. How was the integration proceeding thus far? In the short period of time that you've owned it, anything better than expected, anything not as good? You mentioned synergies with most coming in 2026 rather than 2025 due to CMA issues, but anything you've noticed from either positive or negative and how should we think about the $100 million of synergies and potential upside?

Integration is going well. We inherited a very strong leadership team and the cultures are a good fit. We're well down the path of sharing best practices across critical areas of the business. From a customer and market standpoint, we have common customers among the large CPGs, and there's opportunity to leverage those relationships. From a supplier standpoint, purchasing direct materials like tinplate, coatings, and compounds is a clear area of focus. We couldn't go to market together until January, but we're putting together a global direct materials buying strategy. From an indirect material standpoint—logistics, pallets, packaging supplies—we're looking across our large European platform, which includes industrial and paper can businesses, and now metal. We're confident in the $100 million synergy target to get to that run rate by the end of 2026, and there's significant opportunity to leverage SG&A across Europe through shared services in HR, IT, and finance.

I just want to add that the support from our new colleagues at Eviosus and their integration team's been fantastic. We feel very optimistic about the integration and the Eviosus business joining Sonoco.

Thanks very much, and good luck in 2025.

Your next question comes from the line of George Staphos from Bank of America. Line is open.

Hi. Thanks for taking my follow-on question. Could we talk about productivity ex-synergy? If you've mentioned it earlier in the remarks, forgive me for missing it. What do you expect for 2025 and how would the mix look across industrial and consumer? Secondly, on the supply chain and the purchasing work, any issues to be concerned about relative to trade, tariffs, and the like? How do you feel about your supply of metal? And switching gears on metal itself, can you give a bit more color on where you're seeing strength in aerosol? Is it coming more from construction markets or elsewhere? And within food, what are you doing to diversify the customer base that that business has had traditionally? Thank you.

On productivity for 2025, year-over-year we're taking a more conservative view. Given our run rate in prior years, we're estimating roughly in the neighborhood of $60 to $65 million year-over-year in the base business. Hopefully we'll stay on the same track we've been on. The mix of productivity gains is pretty balanced between consumer and industrial.

Keep in mind that we reclassified businesses such as flexibles and plastics out of certain segments, and those were strong contributors to productivity historically. There are other significant pieces of productivity that don't show up directly in that $64 million estimate, so the overall productivity picture includes some items outside the core number Howard referenced.

From a mix standpoint, the productivity benefits are balanced between consumer and industrial.

On tariffs, we'll see how they ultimately play out. We don't like them and they do impact our US business. We have mechanisms to pass through costs without issue, and we'll do all we can to minimize the impact. The diversity of our supply chain gives us more options. Roughly 60% of our business is non-US, supplied in local markets, so the impact is primarily on the metal side in the US. The paper side is less affected. Regarding aerosol strength, demand in paint-related aerosols has increased considerably and seasonality has been strong. We're also seeing disinfectants performing well. In the base business we are focusing on service and quality improvements, which have helped us regain and gain share.

Thanks very much. Good luck in the quarter.

Your next question comes from the line of Richard Carlson from Wells Fargo. Your line is open.

Hey. Good morning, guys. This is Richard in for Gabe Hajde this morning. I just wanted to double click on the 2026 leverage target if you could. I know it's early for guidance, but other than the already disclosed asset sales and the Eviosus synergies, are there any other big pieces that we need to be keeping in mind when we work our models? And then on CapEx, there's a good chart you had on slide seven. Should we think about that as a continued trend either towards a maintenance level, or are you focused more on a percentage of sales basis? Thank you.

On CapEx, it's more weighted toward value-added projects. Before I call it, roughly around 60% of the capital we're forecasting for the coming year is value-added versus maintenance. That mix has flipped over the last three or four years and we've outlined a number of major capital initiatives. We expect to see the benefit as these projects ramp over 2026 to 2028.

As we said earlier on the call, we're targeting to get to 3 to 3.3 times leverage by the end of 2026. We're moving forward with strategic alternatives for ThermoSafe — those proceeds would help accelerate that — and we believe strong operating and free cash flow generation will give us confidence we can get to that 3 to 3.3 times by the end of 2026. On capital, we're tilting more toward growth and value-generating spending and expect to continue investing in the business in that 4.5% to 5.5% of sales range.

Great. Thanks, guys. Best of luck in the quarter.

And that concludes our question and answer session. I will now turn the call back over to Roger Schrum for closing remarks.

I certainly want to thank everybody for joining us today, and we look forward to further discussions with you. We do have some upcoming meetings with investors and conferences that are posted on our website. So stay tuned for other updates and presentations that we have. Again, thank you for your participation. You can disconnect.

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