NYSE:SON Sonoco Products Q4 2024 Earnings Report $43.85 +0.43 (+0.99%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$44.62 +0.77 (+1.77%) As of 04/17/2025 05:25 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Sonoco Products EPS ResultsActual EPS$1.17Consensus EPS $1.18Beat/MissMissed by -$0.01One Year Ago EPSN/ASonoco Products Revenue ResultsActual Revenue$1.36 billionExpected Revenue$1.67 billionBeat/MissMissed by -$311.31 millionYoY Revenue GrowthN/ASonoco Products Announcement DetailsQuarterQ4 2024Date2/18/2025TimeAfter Market ClosesConference Call DateWednesday, February 19, 2025Conference Call Time8:30AM ETUpcoming EarningsSonoco Products' Q1 2025 earnings is scheduled for Tuesday, April 29, 2025, with a conference call scheduled on Wednesday, April 30, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Sonoco Products Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 19, 2025 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Thank you for standing by, and welcome to the Sunoco Fourth Quarter twenty twenty four 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. Thank you. I'd now like to turn the call over to Roger Schrum, Interim Head of Investor Relations and Communications. Operator00:00:28You may begin. Speaker 100:00:31Thank you, Rob, and good morning, everyone. Yesterday evening, we issued a news release and posted an investor presentation that reviews Sunoco's fourth quarter and full year results along with our 2025 guidance. 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 would remind you that during today's call, we will discuss a number of forward looking statements based on current expectations, estimates and projections. Speaker 100:01:09These 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. Speaker 100:02:03Joining me this morning are Howard Coker, President and CEO Roger Fuller, Chief Operating Officer and Jerry Cheatham, Interim Chief Financial Officer. For today's call, we will have a prepared remarks followed by Q and A. If you will turn to Slide four in our presentation I will now turn the call over to Howard. Speaker 200:02:25Thank you, Roger and welcome back. 2024 was a milestone year for Sunoco as we created global leadership and sustainable metal packaging following the December 4 acquisition of Eviosis, Europe's leading food cans, inns and closure manufacturer. Slide five shows we jump started the integration process with day one celebrations with large groups of employees at several Eviosa's facilities. Our teams are now deep in the process of integrating into Sunoco metal packaging EMEA and achieving our two year one hundred million dollars synergy target. Also on December 18, we further transformed our portfolio through the announced divestiture of our ThermoForm and Flexible Packaging business to Topan Holdings for approximately $1,800,000,000 We're on track to complete the sale during the second quarter having now received approval from regulators in The U. Speaker 200:03:26S, Brazil and The U. K. We're continuing a strategic review of our remaining cold chain temperature assured 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. Speaker 200:03:58Gerry will provide the details and drivers for the quarter, but adjusted earnings per share excluding Eviosus, which we did not project in our guidance, are within our expectation. While Evios has recorded a loss in December, it was primarily due to interest expense that was incurred and operations were experienced a normal year end holiday season slowdown. Rest assured, EBSS is a highly profitable, high quality asset and results so far in 2025 are certainly meeting our expectations. Overall in the fourth quarter, Sunoco produced 5% improvement in adjusted EBITDA and adjusted EBITDA margin expanded to nearly 15% driven primarily by strong productivity. For all of 2024, we achieved approximately 183,000,000 in productivity savings, equally split between our consumer and industrial segments. Speaker 200:05:01As mentioned earlier, some of our operations were impacted by two hurricanes, which hit the Southeast United States in early fourth quarter, including our largest summer farming 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, Sunoco generated a better than expected $834,000,000 in operating cash flow and $456,000,000 in free cash flow. This was the second largest operating cash flow year by Sunoco and we invested a record $378,000,000 on capital projects focused on growth and productivity. The results of our multiyear invest in our sales strategy are demonstrated through our improved productivity. Speaker 200:06:05Today's investments are more weighted towards growth. If you look at Slide seven, you'll see where we're continuing to invest across our business as including expanding greenfield paper can production in Thailand and Mexico and in The U. S. 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. Speaker 200:06:39Also, we're recapitalizing caulk tube production for adhesives and sealants for our customers who experienced strong demand as contractors and homeowners repair their homes and businesses from unprecedented storms and fire related damages. In metal packaging, we're adding capabilities to meeting rising demand for aerosol cans in The U. S. And wet pet food cans in both U. S. Speaker 200:07:05And Europe along with customer specific caps and closures project. And finally, our industrial and paper products businesses are continuing to capture targeted growth opportunities and productivity projects in The U. S. And Europe, but we continue to focus on rightsizing select markets. Now with that brief introduction, let me turn the call over to Gerry Cheatham who took over the interim CFO role in January and frankly is doing a great job. Speaker 200:07:35I won't go over Jerry's impressive resume, but I've worked with Jerry for most of my career, including when I headed Sunoco's industrial segment, and Jerry served as the group's financial leader. Gerry knows our operations extremely well and he has a trust and respect of our global finance organization. Gerry, welcome and please take us through the numbers. Speaker 300:07:59Thanks, 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 Sunoco. Speaker 300:08:27We 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 Eviosis to $1.17 which was within the lower end of our guidance range. The negative $0.17 related to Eviosis consisted primarily of interest expense on the related transaction financing for the time period we own the business in 2024. The 14.7% EPS improvement year over year was driven by strong performance by strong operational performance and fixed cost reduction initiatives. Speaker 300:09:25Productivity was positive $41,000,000 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, partially offset by the negative impact of price cost and lower volumes in our all other business. Fourth quarter net sales increased two percent to $1,400,000,000 excluding Ditch's continued operations of $297,000,000 This favorable change was driven by low single digit volume gains and the impact of December sales from the Eviosis acquisition that was completed on December 4. This was partially offset by reclassifying the recycling business as a procurement function, lower selling prices and reduce volumes from actions to exit or divest non strategic positions. Adjusted EBITDA of $247,000,000 was up 5% and adjusted EBITDA margins improved by 46 basis points to 14.9%. Speaker 300:10:37Page 10 has our consumer segment results on a continuing operations basis. Consumer sales were up 18% due to the Eviosis acquisition and favorable volume mix. This was partially offset by lower selling prices. Eviosis contributed twenty seven 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. Speaker 300:11:13Consumer adjusted EBITDA margins consumer adjusted EBITDA from continuing operations grew 9% year over year due to productivity and fixed cost reductions that was partially offset by negative price costs. Page 11 has our industrial segment results. Industrial sales decreased 4% to $571,000,000 These results include the reclassification of recycling, which reduced sales by $24,000,000 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. Speaker 300:12:00Organic 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 two fifty basis points year over year in the fourth quarter, driven by strong productivity. Adjusted EBITDA increased by $11,000,000 to $102,000,000 representing a 12% increase. Page 12 has the results of our all other businesses. Speaker 300:12:39All other sales were $88,000,000 and adjusted EBITDA was $8,000,000 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 plastics 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 $834,000,000 for the year. This was the second best year on the heels of $883,000,000 record year performance in 2023. We invested $378,000,000 for the year on capital projects to enable future growth and drive margin improvement. Speaker 300:13:38Now turning to Page 14 and looking ahead to 2025. Our full year guidance considers a full year of Vibiosis 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. Speaker 300:14:14Turning to the sales bridge on Page 15. We're projecting sales to grow by 21.5% from $6,600,000,000 to approximately $8,000,000,000 primarily due to the acquisition of Eviosis, 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 reset. 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 all other in the all other group of businesses is expected to be mixed with organic growth varying from low single digits to mid teens. Speaker 300:15:10Slide 16 provides a 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 expense. The Eviosa's acquisition is expected to be 25% accretive and the TFP divestiture is expected to be dilutive in the range to 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. Speaker 300:16:21Non operational expenses are expected to lower EPS between $0.25 to $0.3 due to a higher effective tax rate resulting from discrete items in 2024 that we do not expect to repeat, FX headwinds and higher net interest expense. Page 17 presents our cash flow guidance and key assumptions. We expect to have another strong year of operating cash flow performance in the range of $800,000,000 to $900,000,000 dollars and free cash flow between $450,000,000 to $550,000,000 We are targeting capital expenditures of approximately $360,000,000 to our growth and margin expansion opportunities. The ratio of capital spending as a percent of net sales is expected to be slower 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 $25,000,000 Now with that, I'll turn it back over to Howard for closing remarks. Speaker 200:17:30Great. Thanks, Sherry. I'll now move to Slide 18. Sunoco today is the global leader of value added sustainable metal and fiber consumer and industrial packaging. We've become a simpler, stronger and more sustainable company with products, technology and market presence that positions us to consistently win in the marketplace. Speaker 200:17:56Since 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 the low margin display and packaging business and other smaller non core assets. We moved away from resin based businesses ranging from molded foam products for automobiles to plastic bottles and tray food 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 MEA where we now have assembled quality assets and strong market position. Speaker 200:18:47For example, purchasing ball metal pack 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 VBiosis 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. Speaker 200:19:47The 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 has become its cash generating engine producing approximately $1,700,000,000 in operating cash flow and $1,000,000,000 in free cash over the past two years. After investing in ourselves, Speaker 400:20:14our Speaker 200:20:15capital allocation strategy is focused on reducing leverage to between three times to 3.3 times net debt to adjusted EBITDA by the end of twenty twenty six, utilizing proceeds from divestitures, asset sales and our strong free cash flow. And finally, we expect to achieve an extraordinary one hundred consecutive years of returning cash to our shareholders in the form of sector leading dividends. Slide 19 is a graphic representation of what the new Sunoco is expected to achieve in 2025 along with our businesses and serve markets. We project sales will grow approximately 20% between $7,750,000,000 and 8 point or excuse me, dollars 8,000,000,000. Adjusted EBITDA is expected to grow approximately 30% to between $1,300,000,000 to $1,400,000,000 And cash flow from operations will remain strong between $800,000,000 and $900,000,000 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. Speaker 200:21:34Looking forward, we believe our transformed portfolio of world class consumer 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. And with that, operator, we're ready to take any questions. Operator00:22:07Thank you. We will now begin the question and answer session. Your first question comes from the line of George Staphos from Bank of America. Your line is open. Speaker 500:22:26Thanks. Good morning, everyone. Thanks for the details. Gerry, welcome. Roger, great to hear your voice again. Speaker 500:22:32Hope everybody is well. I guess, can you talk a little bit about the exit rates or early 1Q rates, depending on your perspective, that you're seeing across your most important businesses? Relatedly, can you talk about how Eviosis is doing relative to the original, I want to say, dollars $430,000,000 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. Speaker 500:23:09I might have a quick follow on. Speaker 200:23:13Sure, George. On the exit rates, actually the adjusted run rate for Eviosus looks like it's going to be around somewhere in the neighborhood of around $390,000,000 for 2024. As we've entered into the 2025, our expectation is and our plan is 10% increase in that number and that's what we've got built into our guidance. And so far, we're seeing that type of run rate obviously early with a month and a half behind us. But, we're very bullish about, about to go forward there. Speaker 200:23:54And then on the remainder of businesses, yeah, we've been seeing sequential improvement particularly on the, the metal can business here in North America. Slight improvements, the flat flattish coming out of December on the paper can business and we've seen consecutive improvements particularly in North America on the industrial business quarter over quarter over the last three quarters. So as we enter the new year, they'll they'll uniquely positive about how, how we're starting things out or a lot of uncertainty with what's going on the macro perspective that we control what we can control. Speaker 300:24:39Howard, just as it relates to expectations for TFP in the first quarter, we expect their first quarter twenty twenty four performance to be similar to what we saw in Q4 Speaker 200:24:54twenty twenty four. Speaker 500:24:58Okay. So, that would be roughly twenty million dollars ish, $25,000,000 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? Speaker 500:25:15It was somewhat below our forecast, which is neither here nor there, but just want to see if there were any things in 4Q that were either positive or negative relative to your guidance? Thank you. And I'll turn it over. Speaker 100:25:28Yes, George, this is Roger. Yes, as far as industrial North America, we were very pleased with the fourth quarter. As Howard has already said, we've seen nice growth in our tubing core converting operations in North America with the team doing a really nice job from a service and quality standpoint and winning some shares, especially in the paper mill core area. Paper volumes, URB volumes in North America were basically flat, maybe up just slightly. We did see weakness outside of North America and I think that's what you're seeing in the numbers. Speaker 100:25:57Europe continued to be very soft. We've got work to do there frankly 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 and our industrial businesses in Asia, very soft volume. Speaker 100:26:29We 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 very good sign. Speaker 100:26:46We see that continuing into the first quarter. So it's outside North America. We're working hard to get cost right and we'll see sequential improvement, but it'll take a little bit of time as we run through 2025. Speaker 500:27:01Okay. Thanks very much. I'll turn it over. Operator00:27:06Your next question comes from the line of Anthony Pettinari from Citi. Your line is open. Speaker 600:27:12Good 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. Speaker 600:27:25Just curious what that maybe implies specifically for consumer. We 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? Speaker 200:27:41Yes, Brian. If I just look at my charts here, really we're seeing it and the two main businesses left in consumer, the the metals business in North America. We saw saw an aggregate solid, solid, but low low low single digit type growth, over the last year quarter to quarter to quarter, actually, strong and and, in the in the low double low single digits for, for the full year. And, we're seeing a pickup in our global paper can business as well. So I talked earlier about capital deployment. Speaker 200:28:25You know, a lot of those projects, the new plants in Thailand, Mexico, new lines in The US, some are in their early stages of startup. Others will be starting up over a period of time. But, we're not, as we said, low single type digits. We're not forecasting any great recovery. But that's where it's been driven from. Speaker 600:28:50Got 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. Speaker 600:29:06I'm curious if you think maybe you have a full recovery or a partial recovery. 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. Speaker 200:29:22Yes. I'd say we're not, slightly better. I mean, veins were impacted. There were a few markets that were impacted. But as you noted, we're we're kind of holding things in that low single digit up. Speaker 200:29:36So we're not we're not, forecasting any great, type recovery. But certainly, we feel like, where we are from a from a share position, particularly on aerosols, we do have visibility of exactly where that growth is coming from. I think if we have a great tax season, that's just upside. Operator00:30:01Your next question comes from the line of Matt Roberts from Raymond James. Your line is open. Speaker 700:30:08Hey, good morning, gentlemen. Thank you for taking the questions. If I could first follow-up on George's question earlier, I understand there's 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 1Q 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? Speaker 700:30:37Thanks. Speaker 200:30:40Yes, Matt. Matt, you you named it right from the very beginning. There are a lot of moving pieces. I think, there'll be quite a few follow-up calls to help, clean up some of the questions you guys may may have. But, we offset because of that with all the moving pieces, going on right now, disco ops, etcetera, associated with the TFP, etcetera. Speaker 200:31:06We've just decided that we would go with an annual forecast and we'll certainly update you on a quarter by quarter basis as we move through the year. But that pretty much covers. Speaker 700:31:19Very good. Thanks Howard. And certainly understandable there. Maybe on thermosafe, I think it was recently as November, you're expected to sign something there in early half of twenty twenty five and close out in the middle of the year. Have there been any changes in the thinking or timing there? Speaker 700:31:39I believe you noted volumes in the other all other segment were negative exiting the year. We've heard some destocking has lingered in pharma and markets. 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 twenty four months after EBSIS. Speaker 700:32:07Thank you again for taking the questions. Speaker 100:32:11Hey, Matt. It's Roger. Quickly on ThermoSafe. As you mentioned, volumes were a little soft in the fourth quarter and really that's an industry issue. As you said, the pharma slows, sales have slowed some. Speaker 100:32:25We're optimistic about 2025. However, if you look at a number of Kiares that we're focused on, GLP one drugs is one of those. You know, last year, the supply of those drugs was so tight. There was a there was a very tight restriction on the number of GLP-one drugs that could be shipped to clinics, doctors offices for samples. And as you've seen in, with one of the largest producers of that, they're now shipping direct to consumer and that will positively impact our thermostat business. Speaker 100:32:54A lot going on in vaccines. As you know, COVID vaccines has slowed tremendously. We all understand that. But if you look at flu vaccines with the flu season we've had this year, we expect flu vaccines to be very strong in 2025 and there are new products coming out there like this for flu vaccine. So we're still optimistic on thermosafe. Speaker 100:33:14We've not changed what our expectations are there. We expect the divestiture process to be completed by the end of the year, so that's not changed. And as you've already said that's built into our deleveraging plan. So we're still optimistic there. The slowdown is an industry issue, but we've got some very specific areas that we're optimistic about in 2025. Speaker 700:33:38Drew, Howard. Thank you all again. Operator00:33:42Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Your line is open. Speaker 800:33:49Thank 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 $600,000 to $620,000 and then you also have CapEx lower than DD and 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? Speaker 300:34:25Yes. I think probably what you're seeing there on the first of all, in our cash flow guidance, it is reflecting kind of a normal working capital profile and you're probably seeing the impact of some higher interest expense and a higher effective tax rate sort of pulling it down a little bit. So those would be the two items that may be giving you a little bit of a trouble in reconciling that. Speaker 800:34:56Okay. 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 that might be included in the guide one way or the other? Speaker 200:35:12No, Mark. There really isn't pretty much flattish from a global perspective. So nothing material there to talk about. Speaker 800:35:25Okay, great. And then lastly, on Eviosys, thanks for the specifics in terms of like what you're expecting. The numbers you were using, does that include synergies for 2025? Or is that 10% increase on the three point nine years that ex synergies? Speaker 200:35:46Yes. I'm glad you asked, Mark. Synergy wise, we had anticipated that we would achieve a fairly significant percentage of the synergies in year one. As you recall, when we announced the deal mid summer, we did not expect that that The UK authority, CMA, would take a deep, semi deep dive into this. So we did not we were not able to close, until the December, which really put us on our, on our heels in terms of negotiating annual contracts with our major suppliers. Speaker 200:36:27In fact, it turned more into ensuring that we had the necessary raw materials to run the global business. So rather than the majority of the synergies coming in year one, we're estimating about a third of those synergies coming through, with the remainder really flowing into 2026. So not a lot of synergies there at least in terms of the context of what we had anticipated. But certainly we are extremely bullish not only on the procurement side, but the deeper we get into the to the business through the integration. And the more simpler simplified portfolio being really two substrates now cans and, URB and converted products. Speaker 200:37:18The opportunity to drive even further productivity through SG and A is pretty exciting over the coming years. Speaker 100:37:27Just to add, Mark Those synergies don't hey Mark, sorry, those synergies don't necessarily all fall within that EDOs' result as well. They spread between the other industrial the other businesses in Europe and some of the metal business in The U. S. Those synergies are really corporate line. Speaker 800:37:43Okay. That's super helpful. And then maybe and I apologize, I know I'm going a little long here, but just the shortfall last year in Eviosus relative to what you might have been originally anticipating, anything specific you can point to? Speaker 200:38:02There are quite a few items. Obviously, they had some issues with I'd say obviously, but they did have some volume issues earlier in the year, surprise cost issues, you know, things that, that that happened. I would I would say that, general transaction related disruptions, were a part of it. But at the end of the day, as we noted that, we're highly confident in the go forward outlook of the business. Speaker 800:38:34Thank you. Operator00:38:37Your next question comes from the line of Mike Roxon from Truist Securities. Your line is open. Speaker 400:38:45Thanks very much for taking the questions and congrats on all the progress. Just wanted to follow-up. I think Roger, you mentioned European weakness in paper and you quoted you mentioned how it's having some work to do. Any way you could expand on that, provide some more color around what you're thinking about doing in Europe to improve the business or maybe just to continue to rationalize assets as you did in Greece? Speaker 100:39:15Yes, good question. Yes, what I was referring to as you can well most people remember six, seven years ago we started this process in North America really highly investing in our lowest cost, our best mills and frankly just taking out high cost capacity and really just optimizing the network from the paper mill side of the business. And that's really the work I was talking about in Europe. As I said, we took the mill out of Greece and in my opinion, we just need a more hard focus on really making the difficult decisions around where should we be providing URB in Europe, how can we be more competitive in accelerating our push to invest in our best mills and we've got some fantastic mills in Europe. As I said, we've made moves in Greece. Speaker 100:40:03We've made a move in Ireland to get some unprofitable capacity out Speaker 200:40:07of the system. So in Speaker 100:40:09my opinion, we just need to accelerate that. We are accelerating that. It just takes time and in some cases it takes capital, which we're working through. Speaker 400:40:19Got it. Thank you. Is that something that we should expect will be largely done this year as well, so that when you look at 2026, this is going to be in this will be in hindsight? Speaker 100:40:31You'll see improvements this year in Europe year over year. That's in the guidance and we're confident around that. You'll see more moves around capacity in Europe this year. So, yes, I think you'll see improvements this year and they'll flow into 2026, but we're actively working on it as we speak. Speaker 900:40:52Got it. Speaker 400:40:52Great. And then just one quick follow-up on Ediosis. How was the integration proceeding thus far? And in the short time or short period of time that you've owned it, anything better than expected, anything not as good? Obviously, you mentioned the synergies with most of that now coming in 2026 rather than 2025 just given some of the CMA issues. Speaker 400:41:15But anything that you've noticed from either positive or negative? And how should we think about the $100,000,000 of synergies and potential upside to that? Speaker 100:41:25Hey, Mike, it's Roger again. Speaker 400:41:26Yes, I Speaker 100:41:27think integration is going great frankly. As we expected, we inherited a very strong leadership team. Our cultures are a perfect fit. We're well down the path of sharing best practices across all critical areas of the business. From a customer and market opportunity standpoint, we have a couple we have some common customers as a large CPGs, the ones you would know. Speaker 100:41:50And we think there's good opportunity to leverage those relationships. And there are some large CPGs that one region serves and the others don't. So we see really good opportunity there. So we're really the extreme focus is on serving our customers and finding new ways to add value across that metal platform. From a supplier standpoint, the purchasing of direct materials, template, coatings, compounds is a clear area we're focusing on. Speaker 100:42:15Howard has already mentioned, we could not even go to market together until January, but we're putting together strategy as we speak to buy those direct materials globally. From an indirect material standpoint, logistics, those types of things, pallets, packaging supplies, You know, we're looking across our large European platform. As you know, we've got a large industrial business there, paper can business there. And now with metal, we're looking at indirect transport cost logistics, leveraging across that European platform. So we're very confident in the $100,000,000 synergy target to get to that $100,000,000 run rate by the end of twenty twenty six. Speaker 100:42:58And there's also a significant opportunity to leverage S and A across Europe. So again, shared services is a tremendous opportunity for us across those three businesses and S and A from an HR and IT and finance standpoint serving our industrial our European businesses and metal, industrial and paper cans. So as I started, I think the integration is going great. We're really pleased with where we are. We're confident in the synergies. Speaker 100:43:24We got a late start, but we've got firm plans in place to catch up. And I just think the support from our new family members from EDIOSIS and their entire Sonoco team has been fantastic. So, feel really optimistic about the integration and the EDIOSIS business coming into the Sonoco. Speaker 400:43:43Thanks Operator00:43:54Your next question comes from the line of George Staphos from Bank of America. Your line is Speaker 500:44:00open. Hi. Thanks for taking my follow on question. So folks, if we could talk about productivity ex synergy, if you had mentioned earlier in the remarks, forgive me for missing it, but what do you expect for 2025 and how would the mix look across industrial and consumer? Secondly, if we think about the supply chain and Roger, you were talking earlier about how you're trying to work both direct and indirect now and the work is progressing. Speaker 500:44:35Any issues to be concerned about relative to trade, to tariffs and the like, how do you feel about your supply of metal? And then totally switching gears, in metal itself, can you give us a bit more color on where you're seeing strength in aerosol? Is it coming more from construction markets? Is it coming elsewhere? And within food, what are you doing to sort of diversify the customer base that you've had traditionally or that that business has had traditionally? Speaker 500:45:13Thank you. Speaker 200:45:16So George, let me see if I got all of those. What about activity for 2025 roughly somewhere in the neighborhood between we're pulling back. I mean year over year we've talked about it over and over again, just just massive improvements, and it is a year over year calculation. So I think we're like a hundred and 80 some odd million, on top of a hundred and 30 plus million in 2023. This year, we're taking a more conservative view again year over year around $60,000,000 to $65,000,000 in the base business. Speaker 200:45:54Hopefully, Speaker 300:45:55we'll stay Speaker 200:45:56on the same kind of track that we've been on. Yeah. Just keep in Speaker 100:45:59mind, George, that does flexibles and plastics is Speaker 200:46:02out of that. So they've been Speaker 100:46:03a strong contributor to the productivity and productivity is built into the eviosis numbers you see, which doesn't fall it won't fall out into that number that Howard was talking about. So there's other pretty significant pieces of productivity in there that don't show up in that $64,000,000 Speaker 500:46:21Yes. Speaker 300:46:21And George, I would add that from a mix standpoint the mix of those are those pretty balanced between consumer and industrial. Speaker 200:46:30Yes. And on the tariffs we'll see how they ultimately end up. We don't like them. Certainly it's an impact here on our U. S. Speaker 200:46:40Business. And we have mechanisms to pass through without issue, but we're going to do all we can to minimize the impact of that that we can. And frankly, you know, the diversity of the, the supply chain that that we've now have gives us more opportunities than than otherwise we would have. I would say that if if you look at it for the remainder outside of The US to keep in mind that, in total, roughly 60% of our businesses is non US, and serving local markets, supply them local markets. So, the impact to your point really is on on the, on the metal side. Speaker 200:47:26The paper side of the business is less of an impact. Again, a little bit going on between Canada and Mexico, but, we'll be able to navigate through that without any type of material issue. In terms of strengths, on the aerosol side, yeah, we've just seen the demand on the paint side of the business has increased considerably. I think that has a lot to do with, you can understand the hangover effect of COVID. And I imagine every one of us have got a few paint cans still sitting in our in our, garages. Speaker 200:48:09But, the paint paints are are up. Flu season has been, pretty strong. So we're seeing it in disinfectants as well. So yeah. And then on on, you know, on the on the base business, really focusing on the customers that we have. Speaker 200:48:25And and, you know, historically, there was a share position that, that, the the previous strategic owner had that, got deteriorated. And we just are working harder and harder to, to satisfy, provide the service quality expected of of of those customers and, and we're seeing that rewarded and and increase slight slight increases in share. Speaker 500:48:51Thanks very much. Good luck in the quarter. Speaker 200:48:54Thanks, George. Operator00:48:56Your next question comes from the line of Richard Carlson from Wells Fargo. Your line is open. Speaker 900:49:03Hey, good morning guys. This is Richard in for Gabe Haiti this morning. I just wanted to double click on the 2026 leverage target if you guys could. I know it's too early for guidance, but other than the already disclosed asset sales and the Eviosys 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. Speaker 900:49:24Should we think about that kind of continued trend either towards a maintenance level or are you focused more on a percentage of sales basis? Thank you. Speaker 200:49:35Yes. I'll let Jerry talk about the leverage. But Richard, yes, the CapEx is actually more weighted towards value added. I think it's the for our call somewhere around 60% of the capital that we're forecasting for this coming year is, is is value added versus versus maintenance. So you've seen that flip, over the last three or four years, and I've I've already talked through a number of major capital initiatives. Speaker 200:50:02We've got sponsored greenfield plants going up around the world. So, pretty bullish about that understanding that, you know, if we invest, it costs, and we'll see the benefit of, these plants as they start ramping up '26, '20 '7, '20 '8. Can you talk about the leverage? Speaker 300:50:22Yes. As we said earlier on the call, we're targeting to get to three to 3.5 to 3.3 times leverage by towards the end of twenty twenty six. Obviously, we are moving forward with the strategic alternatives for thermal safe, which will those proceeds would help accelerate that. But we also believe that strong operating cash flow and strong free cash flow generation will give us confidence that we can get there to that three times to 3.3 times by the end of twenty twenty six. And on your question on capital, we are trying to tilt more of our capital towards a growth and value generating standpoint. Speaker 300:51:08And we do expect to continue to invest in our businesses in that 4.5 times to 5.5 times percent of sales. Speaker 900:51:19Great. Thanks guys. Best of luck in the quarter. Operator00:51:24And that concludes our question and answer session. I will now turn the call back over to Roger Schrum for closing remarks. Speaker 100:51:32I 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 and you can disconnect. Operator00:51:54This concludes today's conference call. Thank you for joining. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSonoco Products Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Sonoco Products Earnings HeadlinesSonoco Increases Quarterly Common Stock DividendApril 16 at 2:55 PM | gurufocus.comSonoco Increases Quarterly Common Stock DividendApril 16 at 11:50 AM | globenewswire.comBREAKING: Trump Bans NVIDIA Chips to ChinaOn April 16th, 2025, President Trump banned Nvidia from selling its most advanced semiconductors to China. That brings the U.S. and China closer to war than at any time since the Korean War ended in 1953.April 18, 2025 | Behind the Markets (Ad)Sonoco Completes Sale of Thermoformed and Flexibles Packaging Business to TOPPAN Holdings, Inc.April 1, 2025 | globenewswire.comSonoco Named One of America's Most Trustworthy CompaniesMarch 27, 2025 | globenewswire.comSonoco To Implement Price Increase for Core Board and Paperboard in EuropeMarch 27, 2025 | globenewswire.comSee More Sonoco Products Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Sonoco Products? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Sonoco Products and other key companies, straight to your email. Email Address About Sonoco ProductsSonoco Products (NYSE:SON) Company, together with its subsidiaries, designs, develops, manufactures, and sells various engineered and sustainable packaging products in North and South America, Europe, Australia, and Asia. The company operates Consumer Packaging and Industrial Paper Packaging segments. The Consumer Packaging segment offers round and shaped rigid paper, steel, and plastic containers; metal and peelable membrane ends, closures, and components; thermoformed plastic trays and enclosures; and high-barrier flexible packaging products. The Industrial Paper Packaging segment provides paperboard tubes, cones, and cores; paper-based protective packaging products; and uncoated recycled paperboard products. It also offers various packaging materials, including plastic, paper, foam, and other specialty materials. Sonoco Products Company sells its products in various markets, which include paper, textile, film, food, packaging, construction, and wire and cable. The company was founded in 1899 and is headquartered in Hartsville, South Carolina.View Sonoco Products ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? Why Analysts Boosted United Airlines Stock Ahead of EarningsLamb Weston Stock Rises, Earnings Provide Calm Amidst ChaosIntuitive Machines Gains After Earnings Beat, NASA Missions Ahead Upcoming Earnings Tesla (4/22/2025)Intuitive Surgical (4/22/2025)Verizon Communications (4/22/2025)Canadian National Railway (4/22/2025)Novartis (4/22/2025)RTX (4/22/2025)3M (4/22/2025)Capital One Financial (4/22/2025)General Electric (4/22/2025)Danaher (4/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 10 speakers on the call. Operator00:00:00Thank you for standing by, and welcome to the Sunoco Fourth Quarter twenty twenty four 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. Thank you. I'd now like to turn the call over to Roger Schrum, Interim Head of Investor Relations and Communications. Operator00:00:28You may begin. Speaker 100:00:31Thank you, Rob, and good morning, everyone. Yesterday evening, we issued a news release and posted an investor presentation that reviews Sunoco's fourth quarter and full year results along with our 2025 guidance. 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 would remind you that during today's call, we will discuss a number of forward looking statements based on current expectations, estimates and projections. Speaker 100:01:09These 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. Speaker 100:02:03Joining me this morning are Howard Coker, President and CEO Roger Fuller, Chief Operating Officer and Jerry Cheatham, Interim Chief Financial Officer. For today's call, we will have a prepared remarks followed by Q and A. If you will turn to Slide four in our presentation I will now turn the call over to Howard. Speaker 200:02:25Thank you, Roger and welcome back. 2024 was a milestone year for Sunoco as we created global leadership and sustainable metal packaging following the December 4 acquisition of Eviosis, Europe's leading food cans, inns and closure manufacturer. Slide five shows we jump started the integration process with day one celebrations with large groups of employees at several Eviosa's facilities. Our teams are now deep in the process of integrating into Sunoco metal packaging EMEA and achieving our two year one hundred million dollars synergy target. Also on December 18, we further transformed our portfolio through the announced divestiture of our ThermoForm and Flexible Packaging business to Topan Holdings for approximately $1,800,000,000 We're on track to complete the sale during the second quarter having now received approval from regulators in The U. Speaker 200:03:26S, Brazil and The U. K. We're continuing a strategic review of our remaining cold chain temperature assured 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. Speaker 200:03:58Gerry will provide the details and drivers for the quarter, but adjusted earnings per share excluding Eviosus, which we did not project in our guidance, are within our expectation. While Evios has recorded a loss in December, it was primarily due to interest expense that was incurred and operations were experienced a normal year end holiday season slowdown. Rest assured, EBSS is a highly profitable, high quality asset and results so far in 2025 are certainly meeting our expectations. Overall in the fourth quarter, Sunoco produced 5% improvement in adjusted EBITDA and adjusted EBITDA margin expanded to nearly 15% driven primarily by strong productivity. For all of 2024, we achieved approximately 183,000,000 in productivity savings, equally split between our consumer and industrial segments. Speaker 200:05:01As mentioned earlier, some of our operations were impacted by two hurricanes, which hit the Southeast United States in early fourth quarter, including our largest summer farming 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, Sunoco generated a better than expected $834,000,000 in operating cash flow and $456,000,000 in free cash flow. This was the second largest operating cash flow year by Sunoco and we invested a record $378,000,000 on capital projects focused on growth and productivity. The results of our multiyear invest in our sales strategy are demonstrated through our improved productivity. Speaker 200:06:05Today's investments are more weighted towards growth. If you look at Slide seven, you'll see where we're continuing to invest across our business as including expanding greenfield paper can production in Thailand and Mexico and in The U. S. 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. Speaker 200:06:39Also, we're recapitalizing caulk tube production for adhesives and sealants for our customers who experienced strong demand as contractors and homeowners repair their homes and businesses from unprecedented storms and fire related damages. In metal packaging, we're adding capabilities to meeting rising demand for aerosol cans in The U. S. And wet pet food cans in both U. S. Speaker 200:07:05And Europe along with customer specific caps and closures project. And finally, our industrial and paper products businesses are continuing to capture targeted growth opportunities and productivity projects in The U. S. And Europe, but we continue to focus on rightsizing select markets. Now with that brief introduction, let me turn the call over to Gerry Cheatham who took over the interim CFO role in January and frankly is doing a great job. Speaker 200:07:35I won't go over Jerry's impressive resume, but I've worked with Jerry for most of my career, including when I headed Sunoco's industrial segment, and Jerry served as the group's financial leader. Gerry knows our operations extremely well and he has a trust and respect of our global finance organization. Gerry, welcome and please take us through the numbers. Speaker 300:07:59Thanks, 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 Sunoco. Speaker 300:08:27We 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 Eviosis to $1.17 which was within the lower end of our guidance range. The negative $0.17 related to Eviosis consisted primarily of interest expense on the related transaction financing for the time period we own the business in 2024. The 14.7% EPS improvement year over year was driven by strong performance by strong operational performance and fixed cost reduction initiatives. Speaker 300:09:25Productivity was positive $41,000,000 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, partially offset by the negative impact of price cost and lower volumes in our all other business. Fourth quarter net sales increased two percent to $1,400,000,000 excluding Ditch's continued operations of $297,000,000 This favorable change was driven by low single digit volume gains and the impact of December sales from the Eviosis acquisition that was completed on December 4. This was partially offset by reclassifying the recycling business as a procurement function, lower selling prices and reduce volumes from actions to exit or divest non strategic positions. Adjusted EBITDA of $247,000,000 was up 5% and adjusted EBITDA margins improved by 46 basis points to 14.9%. Speaker 300:10:37Page 10 has our consumer segment results on a continuing operations basis. Consumer sales were up 18% due to the Eviosis acquisition and favorable volume mix. This was partially offset by lower selling prices. Eviosis contributed twenty seven 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. Speaker 300:11:13Consumer adjusted EBITDA margins consumer adjusted EBITDA from continuing operations grew 9% year over year due to productivity and fixed cost reductions that was partially offset by negative price costs. Page 11 has our industrial segment results. Industrial sales decreased 4% to $571,000,000 These results include the reclassification of recycling, which reduced sales by $24,000,000 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. Speaker 300:12:00Organic 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 two fifty basis points year over year in the fourth quarter, driven by strong productivity. Adjusted EBITDA increased by $11,000,000 to $102,000,000 representing a 12% increase. Page 12 has the results of our all other businesses. Speaker 300:12:39All other sales were $88,000,000 and adjusted EBITDA was $8,000,000 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 plastics 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 $834,000,000 for the year. This was the second best year on the heels of $883,000,000 record year performance in 2023. We invested $378,000,000 for the year on capital projects to enable future growth and drive margin improvement. Speaker 300:13:38Now turning to Page 14 and looking ahead to 2025. Our full year guidance considers a full year of Vibiosis 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. Speaker 300:14:14Turning to the sales bridge on Page 15. We're projecting sales to grow by 21.5% from $6,600,000,000 to approximately $8,000,000,000 primarily due to the acquisition of Eviosis, 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 reset. 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 all other in the all other group of businesses is expected to be mixed with organic growth varying from low single digits to mid teens. Speaker 300:15:10Slide 16 provides a 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 expense. The Eviosa's acquisition is expected to be 25% accretive and the TFP divestiture is expected to be dilutive in the range to 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. Speaker 300:16:21Non operational expenses are expected to lower EPS between $0.25 to $0.3 due to a higher effective tax rate resulting from discrete items in 2024 that we do not expect to repeat, FX headwinds and higher net interest expense. Page 17 presents our cash flow guidance and key assumptions. We expect to have another strong year of operating cash flow performance in the range of $800,000,000 to $900,000,000 dollars and free cash flow between $450,000,000 to $550,000,000 We are targeting capital expenditures of approximately $360,000,000 to our growth and margin expansion opportunities. The ratio of capital spending as a percent of net sales is expected to be slower 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 $25,000,000 Now with that, I'll turn it back over to Howard for closing remarks. Speaker 200:17:30Great. Thanks, Sherry. I'll now move to Slide 18. Sunoco today is the global leader of value added sustainable metal and fiber consumer and industrial packaging. We've become a simpler, stronger and more sustainable company with products, technology and market presence that positions us to consistently win in the marketplace. Speaker 200:17:56Since 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 the low margin display and packaging business and other smaller non core assets. We moved away from resin based businesses ranging from molded foam products for automobiles to plastic bottles and tray food 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 MEA where we now have assembled quality assets and strong market position. Speaker 200:18:47For example, purchasing ball metal pack 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 VBiosis 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. Speaker 200:19:47The 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 has become its cash generating engine producing approximately $1,700,000,000 in operating cash flow and $1,000,000,000 in free cash over the past two years. After investing in ourselves, Speaker 400:20:14our Speaker 200:20:15capital allocation strategy is focused on reducing leverage to between three times to 3.3 times net debt to adjusted EBITDA by the end of twenty twenty six, utilizing proceeds from divestitures, asset sales and our strong free cash flow. And finally, we expect to achieve an extraordinary one hundred consecutive years of returning cash to our shareholders in the form of sector leading dividends. Slide 19 is a graphic representation of what the new Sunoco is expected to achieve in 2025 along with our businesses and serve markets. We project sales will grow approximately 20% between $7,750,000,000 and 8 point or excuse me, dollars 8,000,000,000. Adjusted EBITDA is expected to grow approximately 30% to between $1,300,000,000 to $1,400,000,000 And cash flow from operations will remain strong between $800,000,000 and $900,000,000 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. Speaker 200:21:34Looking forward, we believe our transformed portfolio of world class consumer 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. And with that, operator, we're ready to take any questions. Operator00:22:07Thank you. We will now begin the question and answer session. Your first question comes from the line of George Staphos from Bank of America. Your line is open. Speaker 500:22:26Thanks. Good morning, everyone. Thanks for the details. Gerry, welcome. Roger, great to hear your voice again. Speaker 500:22:32Hope everybody is well. I guess, can you talk a little bit about the exit rates or early 1Q rates, depending on your perspective, that you're seeing across your most important businesses? Relatedly, can you talk about how Eviosis is doing relative to the original, I want to say, dollars $430,000,000 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. Speaker 500:23:09I might have a quick follow on. Speaker 200:23:13Sure, George. On the exit rates, actually the adjusted run rate for Eviosus looks like it's going to be around somewhere in the neighborhood of around $390,000,000 for 2024. As we've entered into the 2025, our expectation is and our plan is 10% increase in that number and that's what we've got built into our guidance. And so far, we're seeing that type of run rate obviously early with a month and a half behind us. But, we're very bullish about, about to go forward there. Speaker 200:23:54And then on the remainder of businesses, yeah, we've been seeing sequential improvement particularly on the, the metal can business here in North America. Slight improvements, the flat flattish coming out of December on the paper can business and we've seen consecutive improvements particularly in North America on the industrial business quarter over quarter over the last three quarters. So as we enter the new year, they'll they'll uniquely positive about how, how we're starting things out or a lot of uncertainty with what's going on the macro perspective that we control what we can control. Speaker 300:24:39Howard, just as it relates to expectations for TFP in the first quarter, we expect their first quarter twenty twenty four performance to be similar to what we saw in Q4 Speaker 200:24:54twenty twenty four. Speaker 500:24:58Okay. So, that would be roughly twenty million dollars ish, $25,000,000 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? Speaker 500:25:15It was somewhat below our forecast, which is neither here nor there, but just want to see if there were any things in 4Q that were either positive or negative relative to your guidance? Thank you. And I'll turn it over. Speaker 100:25:28Yes, George, this is Roger. Yes, as far as industrial North America, we were very pleased with the fourth quarter. As Howard has already said, we've seen nice growth in our tubing core converting operations in North America with the team doing a really nice job from a service and quality standpoint and winning some shares, especially in the paper mill core area. Paper volumes, URB volumes in North America were basically flat, maybe up just slightly. We did see weakness outside of North America and I think that's what you're seeing in the numbers. Speaker 100:25:57Europe continued to be very soft. We've got work to do there frankly 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 and our industrial businesses in Asia, very soft volume. Speaker 100:26:29We 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 very good sign. Speaker 100:26:46We see that continuing into the first quarter. So it's outside North America. We're working hard to get cost right and we'll see sequential improvement, but it'll take a little bit of time as we run through 2025. Speaker 500:27:01Okay. Thanks very much. I'll turn it over. Operator00:27:06Your next question comes from the line of Anthony Pettinari from Citi. Your line is open. Speaker 600:27:12Good 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. Speaker 600:27:25Just curious what that maybe implies specifically for consumer. We 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? Speaker 200:27:41Yes, Brian. If I just look at my charts here, really we're seeing it and the two main businesses left in consumer, the the metals business in North America. We saw saw an aggregate solid, solid, but low low low single digit type growth, over the last year quarter to quarter to quarter, actually, strong and and, in the in the low double low single digits for, for the full year. And, we're seeing a pickup in our global paper can business as well. So I talked earlier about capital deployment. Speaker 200:28:25You know, a lot of those projects, the new plants in Thailand, Mexico, new lines in The US, some are in their early stages of startup. Others will be starting up over a period of time. But, we're not, as we said, low single type digits. We're not forecasting any great recovery. But that's where it's been driven from. Speaker 600:28:50Got 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. Speaker 600:29:06I'm curious if you think maybe you have a full recovery or a partial recovery. 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. Speaker 200:29:22Yes. I'd say we're not, slightly better. I mean, veins were impacted. There were a few markets that were impacted. But as you noted, we're we're kind of holding things in that low single digit up. Speaker 200:29:36So we're not we're not, forecasting any great, type recovery. But certainly, we feel like, where we are from a from a share position, particularly on aerosols, we do have visibility of exactly where that growth is coming from. I think if we have a great tax season, that's just upside. Operator00:30:01Your next question comes from the line of Matt Roberts from Raymond James. Your line is open. Speaker 700:30:08Hey, good morning, gentlemen. Thank you for taking the questions. If I could first follow-up on George's question earlier, I understand there's 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 1Q 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? Speaker 700:30:37Thanks. Speaker 200:30:40Yes, Matt. Matt, you you named it right from the very beginning. There are a lot of moving pieces. I think, there'll be quite a few follow-up calls to help, clean up some of the questions you guys may may have. But, we offset because of that with all the moving pieces, going on right now, disco ops, etcetera, associated with the TFP, etcetera. Speaker 200:31:06We've just decided that we would go with an annual forecast and we'll certainly update you on a quarter by quarter basis as we move through the year. But that pretty much covers. Speaker 700:31:19Very good. Thanks Howard. And certainly understandable there. Maybe on thermosafe, I think it was recently as November, you're expected to sign something there in early half of twenty twenty five and close out in the middle of the year. Have there been any changes in the thinking or timing there? Speaker 700:31:39I believe you noted volumes in the other all other segment were negative exiting the year. We've heard some destocking has lingered in pharma and markets. 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 twenty four months after EBSIS. Speaker 700:32:07Thank you again for taking the questions. Speaker 100:32:11Hey, Matt. It's Roger. Quickly on ThermoSafe. As you mentioned, volumes were a little soft in the fourth quarter and really that's an industry issue. As you said, the pharma slows, sales have slowed some. Speaker 100:32:25We're optimistic about 2025. However, if you look at a number of Kiares that we're focused on, GLP one drugs is one of those. You know, last year, the supply of those drugs was so tight. There was a there was a very tight restriction on the number of GLP-one drugs that could be shipped to clinics, doctors offices for samples. And as you've seen in, with one of the largest producers of that, they're now shipping direct to consumer and that will positively impact our thermostat business. Speaker 100:32:54A lot going on in vaccines. As you know, COVID vaccines has slowed tremendously. We all understand that. But if you look at flu vaccines with the flu season we've had this year, we expect flu vaccines to be very strong in 2025 and there are new products coming out there like this for flu vaccine. So we're still optimistic on thermosafe. Speaker 100:33:14We've not changed what our expectations are there. We expect the divestiture process to be completed by the end of the year, so that's not changed. And as you've already said that's built into our deleveraging plan. So we're still optimistic there. The slowdown is an industry issue, but we've got some very specific areas that we're optimistic about in 2025. Speaker 700:33:38Drew, Howard. Thank you all again. Operator00:33:42Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Your line is open. Speaker 800:33:49Thank 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 $600,000 to $620,000 and then you also have CapEx lower than DD and 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? Speaker 300:34:25Yes. I think probably what you're seeing there on the first of all, in our cash flow guidance, it is reflecting kind of a normal working capital profile and you're probably seeing the impact of some higher interest expense and a higher effective tax rate sort of pulling it down a little bit. So those would be the two items that may be giving you a little bit of a trouble in reconciling that. Speaker 800:34:56Okay. 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 that might be included in the guide one way or the other? Speaker 200:35:12No, Mark. There really isn't pretty much flattish from a global perspective. So nothing material there to talk about. Speaker 800:35:25Okay, great. And then lastly, on Eviosys, thanks for the specifics in terms of like what you're expecting. The numbers you were using, does that include synergies for 2025? Or is that 10% increase on the three point nine years that ex synergies? Speaker 200:35:46Yes. I'm glad you asked, Mark. Synergy wise, we had anticipated that we would achieve a fairly significant percentage of the synergies in year one. As you recall, when we announced the deal mid summer, we did not expect that that The UK authority, CMA, would take a deep, semi deep dive into this. So we did not we were not able to close, until the December, which really put us on our, on our heels in terms of negotiating annual contracts with our major suppliers. Speaker 200:36:27In fact, it turned more into ensuring that we had the necessary raw materials to run the global business. So rather than the majority of the synergies coming in year one, we're estimating about a third of those synergies coming through, with the remainder really flowing into 2026. So not a lot of synergies there at least in terms of the context of what we had anticipated. But certainly we are extremely bullish not only on the procurement side, but the deeper we get into the to the business through the integration. And the more simpler simplified portfolio being really two substrates now cans and, URB and converted products. Speaker 200:37:18The opportunity to drive even further productivity through SG and A is pretty exciting over the coming years. Speaker 100:37:27Just to add, Mark Those synergies don't hey Mark, sorry, those synergies don't necessarily all fall within that EDOs' result as well. They spread between the other industrial the other businesses in Europe and some of the metal business in The U. S. Those synergies are really corporate line. Speaker 800:37:43Okay. That's super helpful. And then maybe and I apologize, I know I'm going a little long here, but just the shortfall last year in Eviosus relative to what you might have been originally anticipating, anything specific you can point to? Speaker 200:38:02There are quite a few items. Obviously, they had some issues with I'd say obviously, but they did have some volume issues earlier in the year, surprise cost issues, you know, things that, that that happened. I would I would say that, general transaction related disruptions, were a part of it. But at the end of the day, as we noted that, we're highly confident in the go forward outlook of the business. Speaker 800:38:34Thank you. Operator00:38:37Your next question comes from the line of Mike Roxon from Truist Securities. Your line is open. Speaker 400:38:45Thanks very much for taking the questions and congrats on all the progress. Just wanted to follow-up. I think Roger, you mentioned European weakness in paper and you quoted you mentioned how it's having some work to do. Any way you could expand on that, provide some more color around what you're thinking about doing in Europe to improve the business or maybe just to continue to rationalize assets as you did in Greece? Speaker 100:39:15Yes, good question. Yes, what I was referring to as you can well most people remember six, seven years ago we started this process in North America really highly investing in our lowest cost, our best mills and frankly just taking out high cost capacity and really just optimizing the network from the paper mill side of the business. And that's really the work I was talking about in Europe. As I said, we took the mill out of Greece and in my opinion, we just need a more hard focus on really making the difficult decisions around where should we be providing URB in Europe, how can we be more competitive in accelerating our push to invest in our best mills and we've got some fantastic mills in Europe. As I said, we've made moves in Greece. Speaker 100:40:03We've made a move in Ireland to get some unprofitable capacity out Speaker 200:40:07of the system. So in Speaker 100:40:09my opinion, we just need to accelerate that. We are accelerating that. It just takes time and in some cases it takes capital, which we're working through. Speaker 400:40:19Got it. Thank you. Is that something that we should expect will be largely done this year as well, so that when you look at 2026, this is going to be in this will be in hindsight? Speaker 100:40:31You'll see improvements this year in Europe year over year. That's in the guidance and we're confident around that. You'll see more moves around capacity in Europe this year. So, yes, I think you'll see improvements this year and they'll flow into 2026, but we're actively working on it as we speak. Speaker 900:40:52Got it. Speaker 400:40:52Great. And then just one quick follow-up on Ediosis. How was the integration proceeding thus far? And in the short time or short period of time that you've owned it, anything better than expected, anything not as good? Obviously, you mentioned the synergies with most of that now coming in 2026 rather than 2025 just given some of the CMA issues. Speaker 400:41:15But anything that you've noticed from either positive or negative? And how should we think about the $100,000,000 of synergies and potential upside to that? Speaker 100:41:25Hey, Mike, it's Roger again. Speaker 400:41:26Yes, I Speaker 100:41:27think integration is going great frankly. As we expected, we inherited a very strong leadership team. Our cultures are a perfect fit. We're well down the path of sharing best practices across all critical areas of the business. From a customer and market opportunity standpoint, we have a couple we have some common customers as a large CPGs, the ones you would know. Speaker 100:41:50And we think there's good opportunity to leverage those relationships. And there are some large CPGs that one region serves and the others don't. So we see really good opportunity there. So we're really the extreme focus is on serving our customers and finding new ways to add value across that metal platform. From a supplier standpoint, the purchasing of direct materials, template, coatings, compounds is a clear area we're focusing on. Speaker 100:42:15Howard has already mentioned, we could not even go to market together until January, but we're putting together strategy as we speak to buy those direct materials globally. From an indirect material standpoint, logistics, those types of things, pallets, packaging supplies, You know, we're looking across our large European platform. As you know, we've got a large industrial business there, paper can business there. And now with metal, we're looking at indirect transport cost logistics, leveraging across that European platform. So we're very confident in the $100,000,000 synergy target to get to that $100,000,000 run rate by the end of twenty twenty six. Speaker 100:42:58And there's also a significant opportunity to leverage S and A across Europe. So again, shared services is a tremendous opportunity for us across those three businesses and S and A from an HR and IT and finance standpoint serving our industrial our European businesses and metal, industrial and paper cans. So as I started, I think the integration is going great. We're really pleased with where we are. We're confident in the synergies. Speaker 100:43:24We got a late start, but we've got firm plans in place to catch up. And I just think the support from our new family members from EDIOSIS and their entire Sonoco team has been fantastic. So, feel really optimistic about the integration and the EDIOSIS business coming into the Sonoco. Speaker 400:43:43Thanks Operator00:43:54Your next question comes from the line of George Staphos from Bank of America. Your line is Speaker 500:44:00open. Hi. Thanks for taking my follow on question. So folks, if we could talk about productivity ex synergy, if you had mentioned earlier in the remarks, forgive me for missing it, but what do you expect for 2025 and how would the mix look across industrial and consumer? Secondly, if we think about the supply chain and Roger, you were talking earlier about how you're trying to work both direct and indirect now and the work is progressing. Speaker 500:44:35Any issues to be concerned about relative to trade, to tariffs and the like, how do you feel about your supply of metal? And then totally switching gears, in metal itself, can you give us a bit more color on where you're seeing strength in aerosol? Is it coming more from construction markets? Is it coming elsewhere? And within food, what are you doing to sort of diversify the customer base that you've had traditionally or that that business has had traditionally? Speaker 500:45:13Thank you. Speaker 200:45:16So George, let me see if I got all of those. What about activity for 2025 roughly somewhere in the neighborhood between we're pulling back. I mean year over year we've talked about it over and over again, just just massive improvements, and it is a year over year calculation. So I think we're like a hundred and 80 some odd million, on top of a hundred and 30 plus million in 2023. This year, we're taking a more conservative view again year over year around $60,000,000 to $65,000,000 in the base business. Speaker 200:45:54Hopefully, Speaker 300:45:55we'll stay Speaker 200:45:56on the same kind of track that we've been on. Yeah. Just keep in Speaker 100:45:59mind, George, that does flexibles and plastics is Speaker 200:46:02out of that. So they've been Speaker 100:46:03a strong contributor to the productivity and productivity is built into the eviosis numbers you see, which doesn't fall it won't fall out into that number that Howard was talking about. So there's other pretty significant pieces of productivity in there that don't show up in that $64,000,000 Speaker 500:46:21Yes. Speaker 300:46:21And George, I would add that from a mix standpoint the mix of those are those pretty balanced between consumer and industrial. Speaker 200:46:30Yes. And on the tariffs we'll see how they ultimately end up. We don't like them. Certainly it's an impact here on our U. S. Speaker 200:46:40Business. And we have mechanisms to pass through without issue, but we're going to do all we can to minimize the impact of that that we can. And frankly, you know, the diversity of the, the supply chain that that we've now have gives us more opportunities than than otherwise we would have. I would say that if if you look at it for the remainder outside of The US to keep in mind that, in total, roughly 60% of our businesses is non US, and serving local markets, supply them local markets. So, the impact to your point really is on on the, on the metal side. Speaker 200:47:26The paper side of the business is less of an impact. Again, a little bit going on between Canada and Mexico, but, we'll be able to navigate through that without any type of material issue. In terms of strengths, on the aerosol side, yeah, we've just seen the demand on the paint side of the business has increased considerably. I think that has a lot to do with, you can understand the hangover effect of COVID. And I imagine every one of us have got a few paint cans still sitting in our in our, garages. Speaker 200:48:09But, the paint paints are are up. Flu season has been, pretty strong. So we're seeing it in disinfectants as well. So yeah. And then on on, you know, on the on the base business, really focusing on the customers that we have. Speaker 200:48:25And and, you know, historically, there was a share position that, that, the the previous strategic owner had that, got deteriorated. And we just are working harder and harder to, to satisfy, provide the service quality expected of of of those customers and, and we're seeing that rewarded and and increase slight slight increases in share. Speaker 500:48:51Thanks very much. Good luck in the quarter. Speaker 200:48:54Thanks, George. Operator00:48:56Your next question comes from the line of Richard Carlson from Wells Fargo. Your line is open. Speaker 900:49:03Hey, good morning guys. This is Richard in for Gabe Haiti this morning. I just wanted to double click on the 2026 leverage target if you guys could. I know it's too early for guidance, but other than the already disclosed asset sales and the Eviosys 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. Speaker 900:49:24Should we think about that kind of continued trend either towards a maintenance level or are you focused more on a percentage of sales basis? Thank you. Speaker 200:49:35Yes. I'll let Jerry talk about the leverage. But Richard, yes, the CapEx is actually more weighted towards value added. I think it's the for our call somewhere around 60% of the capital that we're forecasting for this coming year is, is is value added versus versus maintenance. So you've seen that flip, over the last three or four years, and I've I've already talked through a number of major capital initiatives. Speaker 200:50:02We've got sponsored greenfield plants going up around the world. So, pretty bullish about that understanding that, you know, if we invest, it costs, and we'll see the benefit of, these plants as they start ramping up '26, '20 '7, '20 '8. Can you talk about the leverage? Speaker 300:50:22Yes. As we said earlier on the call, we're targeting to get to three to 3.5 to 3.3 times leverage by towards the end of twenty twenty six. Obviously, we are moving forward with the strategic alternatives for thermal safe, which will those proceeds would help accelerate that. But we also believe that strong operating cash flow and strong free cash flow generation will give us confidence that we can get there to that three times to 3.3 times by the end of twenty twenty six. And on your question on capital, we are trying to tilt more of our capital towards a growth and value generating standpoint. Speaker 300:51:08And we do expect to continue to invest in our businesses in that 4.5 times to 5.5 times percent of sales. Speaker 900:51:19Great. Thanks guys. Best of luck in the quarter. Operator00:51:24And that concludes our question and answer session. I will now turn the call back over to Roger Schrum for closing remarks. Speaker 100:51:32I 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 and you can disconnect. Operator00:51:54This concludes today's conference call. Thank you for joining. You may now disconnect.Read morePowered by