Sonoco Products Company

Hello everyone. Thank you for joining us and welcome to the Sunoco Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Roger Schrum, Head of Investor Relations and Global Marketing Communications. Please go ahead.

Thank you, Warren, and good morning, everyone. Last evening, we issued a news release and posted an investor presentation that reviews Sunoco's second quarter 2026 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 later today, and we'll post a transcript later this week. If you would turn to slide two, I'll 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, and Paul Joachimczyk, Chief Financial Officer. For today's call, we will provide prepared remarks followed by your questions. If you'll turn to slide four in your presentation, I will now turn the call over to Howard.

Thank you, Roger, and good morning, everyone. Our Seneca team delivered solid second quarter results that met our expectations and exceeded consensus estimates, as productivity and cost controls helped offset global inflation in logistics, petroleum-based chemicals and coatings, and raw materials. Paul will go through the financial details, so I'll concentrate my comments on the solid operating performance of our industrial and consumer segments, where we are the global leaders in uncoated recycled paper and metal and paper cans. Results from our industrial segment exceeded our expectations with operating profits up 4% from what was a strong quarter last year and up 29% from the first quarter. The segment's improvement was driven by $16 million in productivity gains, which more than all said price-cost headwinds stemming from rising costs for freight, chemicals, OCC, and lumber. Thriving industrial growth was strong results from our North American URB mills as trade times were up 6.4%, which boosted mill utilization rates to 95%, the highest level in years. Much of this increased demand came from new market development, such as saturated URB for laminates, as well as share gains. Reels volumes were up 10% as we continue to benefit from demand from wire and cable customers who are helping with the infrastructure build-out of data centers, serving artificial intelligent investments. Overall, global industrial volume next was flat for the quarter, As a strong result from our mills were partially offset by lower demand in Latin America and some of our converting operations. On the consumer side, operating profit was off by 5% during the quarter, but was up 22% sequentially from the first quarter. Both activity and cost containment initiatives boosted consumer results. Paper can volumes were up 9% in EMEA and APAC. Asia volumes being up 29%. Overall, segment volume mix was off 1.8%, driven primarily by lower metal aerosol cans and adhesives and sealant tube demand in the United States. I would add that both U.S. food can and aerosol volumes were strong last year in the second quarter, with volume mix up 6%. As shown on slide 5, global inflationary pressures driven by higher energy expenses stemming from the Middle East situation cost us roughly $10 million of operating profits in the quarter. Freight was the largest component of those cost headwinds. The raw materials were also higher, particularly OCC, which is up $40 per ton year-to-date to $100 a ton. While we were behind the price-cost curve in Q2, The recovery mechanisms are now in place to fully offset these costs. This includes an April URB and converted product price increase, which fully goes into effect in the third quarter, and a $60 ton increase for URB, which went in place on July 8th. We have also implemented contracted paper can price increases globally and are adding necessary surcharges to offset higher diesel costs. Now I'll take a minute and turn the call over to Paul, and then I'll come back on with some thoughts regarding second half expectations.