Sonoco Products Company Earnings Call Nuggets: Consumer Retrenching and the Thermoform Business
George Staphos – Bank of America Merrill Lynch: I guess the first question I had is on the volume trend in Consumer. Can you provide a bit more granularity, I appreciate the percentages, but what your customers were saying was behind the decline, is it the same old that we’ve heard from lot of the other companies guys. Consumer retrenching because of higher food prices and are they seeing any light at the end of the tunnel in terms of the volume outlook for 2013. I had a couple of follow ons after that?
M. Jack Sanders – President and COO: Well I would tell you some of that is what we’ve heard. We believe that there is weakness in package foods relative to the consumer demand. We also heard that there was significant inventory destocking that was actually occurring towards the end of the year, bringing inventories back down to pre-holiday levels. Some impact I would guess from Sandy, minor format changes. I would say the biggest issue George relative to volume in the fourth quarter for consumer was the way it actually occurred we had a reasonable October volumes were down in November slightly but then they dropped off significantly in December which was sort of the phenomenon we saw in 2011 on the industrial side and that creates a significant deleverage for us, but it was the way it flowed in it was a little bit different.
George Staphos – Bank of America Merrill Lynch: Lot of the companies who have echoed your comments Jack have said that backlog picked up in January. Now you don’t necessarily have backlog in flexible packaging or plastic bottles. But have you seen a pickup in your January orders or what the customer are saying or is it still fairly sluggish given the health of the consumer or however you are seeing it?
M. Jack Sanders – President and COO: Well what we actually saw was a continuation of the sluggishness, where that first week maybe 10 days, but then a solid pickup thereafter so much so that I can tell you January is kind of within our expectations. And I would say on both volume and margin on the consumer side.
George Staphos – Bank of America Merrill Lynch: I’ll ask one more question over; you had nice productivity in the quarter, obviously it’s good when you got volume growth within the Industrial segments broadly. Can you remind us what your productivity goal might be for 2013? What makes you most encouraged about being able to achieve that goal and what’s your biggest concern about productivity as we head into ’13?
Barry L. Saunders – SVP and CFO: Well, I would tell you it’s about $60 million, maybe a little bit more. It’s consistent with what we’ve historically done and consistent with the fourth quarter. I think with the reasonable economic condition, some minor growth that we see in the business coming on, we should be able to deliver that number. I feel confident about that. I don’t think we’re going to have the pickups that we had in ’11.
The Thermoform Business
Scott Gaffner – Barclays Capital: I just wanted to dig a little bit deeper on the thermoform business; it’s down another 10% this quarter. Are you seeing anything that could be changing there? I assume it’s still pricing by your customers. To their end-consumers it’s causing some of these issues with thermoform, but do you see maybe any opportunity to restructure that business to take some capacity out? Any potential for pricing to become less of a headwind?
Harris E. DeLoach, Jr. – Chairman and CEO: I would tell you that actually a couple of things relative to thermoforming. Some of the negative productivity that we saw in the quarter, and actually that impacted market slightly was the fact that we were doing a consolidation of a facility that we have in Canada and moving it to our two facilities that are here in the States. So some of that actually impacted the quarter, and we expect that to have a much improved run rate going into 2013. As far as the volumes in that business, certainly it’s around single-serve packaged food, that’s what is driving our numbers and what I have seen as of late is promotion of single-serve packaged food. Used to say 10 for $10, I actually saw that in two different stores. So I believe that there’s going to be some promotional activities around those type of items and hopefully they’ll get a reasonable kickback up or at least grow their volume a little bit in ’13.
Scott Gaffner – Barclays Capital: Then my second question is really around capital allocation. You repatriated the fund in the fourth quarter and you’ll do some more now in the first quarter and then, Barry, I think you mentioned you’ll have a $130 million available and you’ll repay some bonds in November. Can you just sort of talk about as we get through the end of this year how you feel around your debt level and maybe what we could expect for moving into 2014 around capital allocation?
M. Jack Sanders – President and COO: Well, as you laid it out, that’s more or less, what we’re planning is to continue to repatriate some cash. We’ve already paid back the term loan. We have the bond coming due I believe the November time frame. What that will actually do would be ahead of schedule, it will allow us to meet our commitment that we made to repay the monies from the acquisition of Tegrant, as I said, ahead of schedule, so we’re very pleased with that. Then what it does is open up ’14 and ’15 to utilize that cash for any number of opportunities to advance shareholder value.
A Closer Look: Sonoco Products Company Earnings Cheat Sheet>>