Sonoco Products Company

Yesterday evening, we issued a news release and posted an investor presentation that reviews Sunoco's second quarter 2025 financial results. Both are posted on the investor relations section of our website at sunoco.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 will 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 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, Roger Fuller, Chief Operating Officer and Interim CEO of Sunoco Metal Packaging EMEA, Jerry Cheatham, Interim Chief Financial Officer and Paul Johimchik, our new Chief Financial Officer. For today's call, we have prepared remarks followed by Q&A. If you turn to slide four in our presentation, I will now turn the call over to Howard.

Thank you, Roger, and good morning, everyone. Our second quarter results reflected the growing strength of the new Sunoco as we produced strong top line and bottom line growth along with margin expansion. However, we were impacted by global macroeconomic pressures, which affected consumer and industrial demand, and by the delay of the European packing season compared to last year. As slide 5 shows, net sales grew 49%, and adjusted EBITDA was up 25%, while adjusted EBITDA margin expanded by 100 basis points to 17.2%. due primarily to improving margins from our industrial business. Total adjusted earnings grew 7% and were impacted by higher than expected interest expense. 115% growth in adjusted EBITDA in the consumer packaging segment reflects 10% gains in volume mix in our metal U.S. business. In the addition of EVOSIS acquisition, which we have rebranded as Sunoco Metal Packaging, SMP, and EF. The segment also generated solid productivity savings. Our industrial segment grew adjusted EBITDA by 16% due to a favorable price-cost environment and productivity. Industrial segment EBITDA margins expanded to 19%, which was a seventh consecutive quarter of margin improvement. This performance is a tribute to our industrial team's efforts to drive value-based pricing and focus on productivity savings. Here we'll go through all the numbers and business drivers for the quarter in a few minutes. But I also want to formally introduce Paul Joanchek, who joined us as Chief Financial Officer at the end of June. We're really excited to have Paul join us, and he will discuss our guidance before we take a question. Over the past five years, we've been progressing a transformation journey to create a more focused enterprise providing value-added metal and fiber packaging. Slide six illustrates our strategy, in particular what markets we will participate in and how we expect to win in these markets. We're focused on businesses where we can drive a competitive advantage through advanced material science and technology expertise, where our products possess high functionality, and where we can best leverage continuous process improvements to drive productivity. We now have a portfolio of businesses with a mix of large, growing global consumers that value the competitive advantage we provide. As always, Sunoco wins through superior customer service, strong operational execution, innovation, and a culture that is built on our guiding principle that people build businesses by doing the right thing. As illustrated on slide seven, we believe we have now focused our portfolios along the competitive strengths that will allow us to win in the marketplace. Our core businesses include metal packaging, rigid paper containers, and industrial paper packaging. In each of these businesses, we check the box on our key strategic principles, including focusing on markets where we have market leadership. This slide also illustrates why we decided to divest thermoformed and flexible packaging, and why we plan to sell ThermoSafe, our temperature-assured business. Both have developed into meaningful, profitable, and attractive businesses. However, we felt they lacked certain aspects that would allow us to best deploy our operating model to our advantage. So we believe monetizing these assets to redeploy capital back into our core was the right capital allocation decision. Now, turning to slide 8, we continue to progress our transformation journey in the second quarter with the successful divestiture of TFP and the utilization of proceeds and cash to reduce our net leverage ratio to below 3.8 times. We're preparing ThermoSafe for a second half sale process with the expectation that proceeds will be used to further reduce net leverage towards our target of 3 to 3.3 times by the end of 2026. As a result of our portfolio changes, we're in the process of further optimizing our operating footprint and reducing support functions to align them with the needs of our fewer, bigger businesses. We've actioned approximately $20 million in annual savings from spending costs left by the divested businesses. But also, we're now positioned to better leverage shared services strategies some of our global administrative functions to better serve our business, our customers, and to reduce costs. Our successful integration of S&P EMEA continues, where the team is now projecting between $40 million to $50 million in run rate synergies by the end of this year. We also have line of sight to achieve greater than $100 million in cost savings through 2026. At the end of June, we were saddened by the news that Thomas Lopez, CEO of S&P EMEA, had died in his hometown of Murcia, Spain. Lopez was a legend in the European can-making industry, dating back to his leadership in developing the visa into the largest food can producer in the Iberian Peninsula and Morocco. He later became CEO of EBIOSIS and stayed on in that role when we acquired the business last December. Roger Fuller, our Chief Operating Officer, and who has been leading the integration of S&P EMEA, was named Interim CEO. Most of you are familiar with Roger's 40 years of leadership experience at Sunoco. He has been deeply engaged since day one of the acquisition and worked alongside Tomas to build strong customer, employee, and supplier relationships. While Tomas will be missed, Roger is providing leadership stability working with the team to continue our strategy of building global leadership in metal packaging. I'll now turn the call over to Roger to give us a brief update on S&P EMEA. Roger?

Yeah, thank you, Howard. Good day, everyone. If you turn to slide 10, I'll review some key points related to metal packaging EMEA's second quarter performance, third quarter outlook, along with a preview of some significant growth wins that will help us in 2026 and beyond. Second quarter results were impacted by the delay in the startup of the European vegetable packaging season as compared to last year. As we've explained, approximately 40% of our EMEA sales are seasonal and dependent on the timing of the vegetable harvest. In addition, difficult macroeconomic conditions in Europe have slowed consumer demand, and we've also seen a decline in sardine availability in Africa, which has further reduced our volumes. That said, demand for pet food, and certain premium food categories have remained resilient. Looking at the third quarter, which is by far our strongest quarter, we're seeing the harvest season ramp up. Our customers and experts are predicting a solid vegetable harvest that could extend through October, and we expect other food categories to be in line with our expectations. As Howard mentioned, the team is making tremendous progress to achieve synergy savings in the second half of 2025, along with generating opportunities for cost savings that benefit our U.S. metal packaging business. We recently integrated our U.S. and EMEA steel procurement teams into a single, globally focused organization based in Europe and led by a veteran Sunoco steel procurement expert. As we previously said, we expect significant procurement synergies in 2026 after they were delayed in 2025 due to the late closing of the acquisition. So let me close with some exciting new growth projects that our EMEA team signed in the second quarter. First is a multi-year contract with a pet food customer in Eastern Europe, where we'll provide up to 400 million incremental units annually. We expect to start providing cans for this customer from existing operations late in the fourth quarter, and we'll be ramping up production in 2026. Also, we've committed to developing a new satellite production facility in Eastern Europe to help manage their large volume needs. Next is a new five-year contract to provide unique-shaped cans for a powdered nutrition product that will begin in the fourth quarter of 2026 and scale up in 2027. The EMEA team is targeting several additional new customer opportunities that should lead to further volume growth in 2026 and beyond. I'm really excited to be working alongside such a strong international leadership team as we build upon their past success and drive future growth. With that, I'll turn it over to Jerry for the quarterly financial review. Thanks, Roger.