Jefferies & Company Inc Global Industrial Conference. August 14, 2014

Transcription

1 Jefferies & Company Inc Global Industrial Conference August 14, 2014

2 Forward-looking Statements Today s presentation contains a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Information about the Company s use of non-gaap financial measures, why management believes presentation of non-gaap financial measures provides useful information to investors about the Company s financial condition and results of operations, and the purposes for which management uses non-gaap financial measures is included in the Company s Annual Report and on the Company s website at sonoco.com. Pursuant to the requirements of Regulation G, the Company has provided definitions of the non-gaap measures discussed during this presentation as well as reconciliations of those measures to the most closely related GAAP measure on its website at sonoco.com. This presentation does not constitute the solicitation of the purchase or sale of any securities. 2

3 Sonoco Overview 2013 Sales SALES BY OPERATING SEGMENT (Millions of Dollars) SALES BY GEOGRAPHY (Percent) 3

4 Delivering on Our Commitment Financial Performance Consumer Packaging Display and Packaging Paper and Industrial Converted Protective Solutions Sales $1,912 $1,894 Base EBIT $177 $187 Sales $581 $625 Base EBIT $19 $21 Sales $1,841 $1,859 Base EBIT $141 $138 Sales $452 $470 Base EBIT $38 $40 4

5 Global Consumer Strategy Shifting the mix of our businesses toward less cyclical consumer-related markets. 5

6 The i6 Process Insights We gather market and consumer insights using research tools like focus groups, online panels and in-home studies. Ideation Using these consumer behavior insights, we invite packaging engineers, marketing gurus and designers to participate in crossdiscipline brainstorming, developing a suite of ideas and approaches to evaluate. Invention We test the most promising ideas, using our rapidprototyping capabilities, packaging and material science labs and pilot plant to conduct manufacturing test runs. Integration We determine how to best incorporate solutions from an operational perspective, considering things like process development, manufacturing, designing for sustainability and graphics management Sonoco Products Company 6 Iteration Interaction We examine ways to maximize market impact, including testing in a retail environment, evaluating in-store marketing programs or conducting eye-tracking studies to determine graphics and design appeal. In the last step of our process, we evaluate product, promotion and package performance, as well as supply chain integration, manufacturing performance systems and recycling.

7 Expanding the Can Globally Malaysia Can Line Photo 7

8 Flexible Packaging Producing Record Results Successfully started up new rotogravure press in Morristown, Tenn. New technology applications and new products driving growth 8

9 Key Drivers for Plastic Businesses Blow Molding Growth focus on personal care market Capital execution and process orientation deliver improved returns Settle, focus and execute Injection Molding Disciplined adherence to the value proposition Balanced growth industrial and next big win in consumer Operational discipline maintain top quartile returns Thermoforming Defend position as low-cost producer in CPET trays and HIPS portion control Capture polypropylene market expansion Drive productivity and capital execution 9

10 New Customers Fueling Strong Growth Display & Packaging Sales up 4.5%, operating profits up to 34% YTD Record sales in U.S. with Elizabeth Arden, Starbucks, General Mills and others Record sales in international markets with P&G, LEGO, S.C. Johnson, Colgate and others New battery business awarded in U.S. adds $17 million in organic growth Additional opportunities in 2014/

11 Global Industrial Products Strategy Be the clearly recognized value leader and supplier of choice for our custom-engineered solutions within our selected served markets. 11

12 Sonoco Tubes and Cores Volume Trends 12

13 Price/Cost Impact on EBIT 13

14 Global Protective Solutions Strategy Be the supplier of choice for customengineered protective packaging solutions 14

15 Consumer Protective Solutions Protective Packaging #1 market position, sales ~ $170 million Legacy protective sales up 11% in 2013 New GE appliance business added 15

16 Industrial Protective Solutions Components Automotive component sales have grown 50% in three years to $140 million New Celaya, Mexico plant constructed, ramping production New Shelbyville, KY plant breaking ground in 4Q of 2014 Start-up in second half of

17 ThermoSafe Protective Solutions Temperature Assured Packaging Sales flat in 2013 as we moved out of certain lower margin business Margins and EBIT improved Co-located new production facility in German tube and core plant Focusing on new product introduction, backed by ISC Labs (ISTA Certified Labs) 17

18 Delivering on our Commitment Our Critical Path Forward Maximize cash flow Targeted Maximize acquisitions cash flow Global Flexibles Protective Solutions Consolidating Tubes/Cores and Composite Cans Improve organic growth in selected markets Market focus and innovation Optimize the portfolio Focus on what we have Fix Divest Diversify capital deployment Implement share repurchases to further boost shareholder return 18

19 Diversifying Capital Deployment Invest to grow our businesses Increased dividends to shareholders for 32 consecutive years $1.28 per year = 3% yield 89 consecutive years Acquisitions Flexibles in South America, Southeast Asia and North America Protective Solutions in North and South America Consolidating Tubes and Cores; Composite Can Share repurchases 2014: Repurchase at least 2 million shares Annually repurchase dilution Ultimately reduce share count to about 100 million shares outstanding 19

20 Financial Overview Appendix

21 EPS Summary 2 nd Quarter: 2014 vs nd Quarter Actual EPS $0.59 $0.53 Addback for: Restructuring & Asset Impair, Net Other Base EPS $0.63 $0.59 Sonoco Guidance $0.63 to $

22 Sales Bridge 2 nd Quarter 2014 vs (Dollars in millions) Q YTD Sales $1,226 $2,405 Volume / Mix (1) 3 Price Acq / Div Exchange / Other (3) (16) 2014 Sales $1,247 $2,433 22

23 Base EBIT Bridge 2 nd Quarter 2014 vs (Dollars in millions) Q YTD Base EBIT $101 $ 187 Volume / Mix 1 (1) Price / Mat'l, Energy, Frt Costs 5 14 Productivity 7 12 Other (14) (29) Pension Base EBIT $107 $195 23

24 Earnings Guidance 1 st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr Full Year 2013 Base EPS 2014 Base EPS $0.50 $0.59 $0.63 $0.58 $2.30 $0.52 $ Guidance $ $0.54 $ $0.67 $ $0.70 $ $

25 Cash Flow 2 nd Quarter 2014 vs (Dollars in thousands) 2nd Qtr YTD Cash from operations (See Note A) $ 60,068 $ 108,155 $ 105,532 $ 244,479 Purchase of property, plant and equipment, net (46,880) (41,868) (82,298) (97,161) Cash Dividends (32,628) (31,418) (64,353) (61,721) "Free Cash Flow" $ (19,440) $ 34,869 $ (41,119) $ 85,597 Shares acquired under announced buyback (18,468) - (27,103) - Net debt proceeds / (repayments) 50,840 (23,029) 54,535 (281,357) Change in cash 8,373 15,911 (17,787) (193,723) Note A: Cash from operations includes pension and post retirement plan contributions of: $ (10,077) $ (9,326) $ (53,592) $ (24,812) 25

26 Capital Structure 2013 Projected End of 2014 Projected End of 2014 Total Debt $981 $981 Cash $218 $260 Net Debt $763 $721 Commercial Paper $ % Bonds due 2016 $75 9.2% Bonds due 2021 $ % Bonds due 2021 $249 Net Debt to EBITDA Net Debt to Total Cap % 29% 5.75% Bonds due 2040 $605 Other Notes $48 Total Debt $981 : : Baa2 BBB+ 26

27 Contacts Jack Sanders President and CEO Barry Saunders Vice President and CFO Roger Schrum Vice President Investor Relations and Corporate Affairs