Sonoco Products Company

Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Sunoco Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Ask a question during the session. You'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Roger Schrum. Please go ahead, sir.

Thank you, Josh, and good morning, everyone, and welcome to Sunoco's Investor Conference Call to discuss our first quarter financial results. Joining me today are Howard Coker, President and Chief Executive Officer, Roger Fuller, Executive Vice President, and Julie Albrecht, Vice President and Chief Financial Officer. A news release reporting our financial results was issued before the market opened today and is available on the Investor Relations website at sunoco.com. In addition, we will be referencing a presentation that's on our first quarter results, which is also posted on our website this morning. Before we go further, let me remind you that today's call and presentation contains 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. Furthermore, 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 of those measures to the most closely related GAAP measure, is also available in the investor relations section of our website. Now, let me turn it over to Howard for some brief comments.

Thanks, Roger, and good morning, everyone. Let me start by simply saying thank you to our entire Sunoco team. I can't really come close to expressing how much we appreciate the great work all of our associates are doing during these unprecedented times. The stories we are hearing from around the world about the extraordinary efforts our people are executing to meet the critical needs of our customers are truly humbling. Our team's efforts on controlling what is vitally important, including the health and safety of our people, the quality of our products, productivity improvements, and cost management, led to an outstanding first quarter. I would also point out that our balanced mix of consumer and industrial businesses performed extremely well during the quarter as we had strong results across many of our businesses, particularly in the month of March, which we believe was largely attributable to to consumers spending more time at home. That said, the pandemic's impact is clearly starting to weigh on some of our served markets as we enter the second quarter. Also, the unprecedented increases in recycled fiber costs will have a significant negative impact on our second quarter results, which, of course, we will eventually recover. Julie will go through all of these results and our guidance in a minute. Because Snucco is a global company with more than 320 operations in 36 countries, we have been experiencing the realities of the virus outbreak since it was first reported in China in January. As the virus spread throughout Asia and to Europe, the Americas and now across the globe, we've been working with our team to protect and help our associates meet the critical needs of our customers and where we can contribute to our communities to help drive increased testing, and assist health care workers. On slide three, you'll see that throughout the globe, Sunoco is an essential service provider of consumer, industrial, and medical packaging. Eighty percent of our consumer packaging sales are linked to food products, where we're being called on to meet an increased demand for consumers who are having to stay at home. Our paper operations in the U.S. and Canada produce over 200,000 tons of uncoated recycled paperboard, which is used to wind toilet paper and other tissue and towel hygiene products. Our global tubes and cores operations play a key role in servicing the food, hygienic, medical, and textile industries. We also produce flexible and thermoformed medical packagings, and our ThermoSafe division provides temperature-assured packaging for critically needed virus testing and transportation of life-saving vaccines and other drugs. On slide four, you will see examples of how our associates have rallied to our customers' calls for help during the crisis to aid in fighting this deadly virus. Recently, our Alloy division received an urgent call from a medical customer to see if we could use our unique digital printing and laser scoring capabilities to produce plastic face shields to be used by medical providers and first responders. Alloid has been experimenting with a unique digital process where we take a file straight from an engineer's computer, convert it to a machine code, and able to make parts in an hour with no tooling or lead time. Our customer originally asked for 100,000 face shields, and we were able to deliver them in a couple of days. That same customer increased its orders 20-fold, and I'm pleased to say our alloy team is filling the order and preparing to produce much more. Our ThermoSafe division is geared up operations and is working with one of the nation's largest logistics companies and a large medical products company to ship virus test kits to hospitals and medical research labs across the country using our unique temperature-assured coolers. Tech. Our medical packaging business is currently gearing up to produce large quantities of thermoscan thermometer covers, which are essential for safe use by health care providers. And our tube and core operations in Spain worked overtime to deliver tubes to be used by an automotive supplier who has retooled their operations to produce cloth face masks for local hospitals. In addition, we're trying to help out where we can in our local communities. And shown on slide five, we donated hundreds of safety glasses and other protective gear to our local medical center here in Hartsville to keep nurses and medical staff safe as they treat patients. Our perimeter of the store division donated thousands of pounds of clear PET sheets to Georgia Tech and Atlanta to assist in making 50,000 disposable face shields for medical personnel. These are just a few of the efforts which illustrate how our team has It's impacting lives around the world, and we couldn't be more proud of their efforts. With that, Julie, why don't you take us through the first quarter numbers, and I'll come back to discuss our recently announced Project Horizon machine conversion and conclude with some color of what we're seeing entering the second quarter.