Good morning. Welcome to Sonoco's 2026 Annual Shareholders Meeting. I'm John Haley. I'm honored to serve as your Chairman of the Board. Now before we get started, I'd like to recognize the junior and high school students joining us from the East Clarendon School who are studying business and engineering. Welcome. I'd like now to introduce you to the members of our Board of Directors. Please hold your applause until they have all been announced. Steven Boyd. Steven is Chairman of the Board of Trustees at Johnson C. Smith University in Charlotte. Throughout his career, he has held many leadership roles at various consumer products companies, most recently Coca-Cola. Scott Clark. Scott is Chief Executive Officer for Tire Rack, a leading independent tire tester and source for consumer direct tires and accessories based in South Bend, Indiana.
Scott was previously Executive Vice President and a member of the Executive Committee of the Michelin Group. Howard Coker. Howard is Sonoco's President and CEO. He has served our company for 41 years and lives in Hartsville. Dr. Pamela Davies. Pamela is President Emerita and Professor of Strategy at Queens University of Charlotte . Theresa Drew. Theresa was Managing Director of the Carolinas practice of Deloitte, a global accounting firm, until her retirement. Theresa lives in Charlotte. Philippe Guillemot. Philippe is Chairman and CEO of Vallourec, a world leader in premium tubular solutions for energy markets based in Meudon, France. When I'm not working with our Board, I'm CEO of Gosiger Incorporated, a national provider of machine tools and factory automation systems based in Dayton, Ohio. Robert Hill. Robert is our Lead Independent Director.
Robert was most recently Executive Chairman of SouthState Corporation, a regional, nationally chartered banking company based in Columbia, South Carolina. Eleni Istavridis. Eleni was Executive Vice President and Head of Investment Services for Asia at Bank of New York Mellon, a global commercial banking company, until her retirement. Rich Kyle. Rich was most recently President and CEO of Timken Company, a global manufacturer of engineered bearings and industrial motion products based in North Canton, Ohio. Craig Nix. Craig is our newest Board Member. He's Chief Financial Officer of First Citizens BancShares, a Fortune 500 top 20 U.S. financial institution based in Raleigh. It is with sincere appreciation now that we recognize today two Board Members who are not standing for re-election after serving the company for decades. Blythe McGarvie.
Blythe McGarvie served on Sonoco's board since 2014 and most recently chaired the Financial Policy Committee in addition to serving on several other committees. Blythe McGarvie taught accounting for Harvard's MBA program and previously held the CFO title at several consumer products companies. Thomas E. Whiddon. Thomas E. Whiddon recently achieved 25 years on Sonoco's board, having joined in 2001. Thomas E. Whiddon has served as a financial expert for the Audit Committee and previously chaired that committee for many years. Thomas E. Whiddon has also served on our Corporate Governance and Nominating Committees. Thomas E. Whiddon was previously an Advisory Director of Berkshire Partners, a Boston-based private equity firm, and is a retired Vice President of Loews Corporation . We're sincerely grateful for Blythe McGarvie and Thomas E. Whiddon's wisdom and counsel throughout their years of service to Sonoco. This completes our introduction to our directors. Finally, let me also recognize a couple of our other retired directors who are with us today.
Harris DeLoach. Harris served on the Board from 1998-2019, including serving as Chairman from 2005-2013 and Executive Chairman from 2013-2019. James Coker. James served 44 years as a Director from 1969-2013. Please join me once more in giving our current and past Directors a very warm welcome. I will now call the business meeting of Sonoco Products Company to order. I'd like to start by introducing our Corporate Secretary, John Florence, who also serves as Sonoco's General Counsel. The 2025 Annual Report, 2026 Notice of Annual Shareholders Meeting, proxy statement, and proxy were mailed on March 13 to shareholders of record as of February 25th.
Approximately 99 million shares of our common stock were outstanding and entitled to one vote each. We've appointed Elizabeth Kramer of Sonoco and Mark Zimkind of Continental Stock Transfer & Trust as inspectors of the election to oversee tabulation of the ballots. Elizabeth and Mark, would you please stand and be recognized? Thank you. Now, are there any shareholders present who did not vote by proxy and would like to have a ballot? If so, please raise your hand. I don't see any. Mr. Secretary, will you please advise if a quorum is present?
Mr. Chairman, I've been advised by the Inspectors of Election that we received more than 90% proxies of shares outstanding entitled to vote. Therefore, we do in fact have a quorum.
Thank you, John. John has the minutes of last year's meeting if anyone wants to inspect them. At this time, however, I would ask if there were a motion to dispense with John's readings of the minutes. Mr. Chairman, I move to dispense the reading of the minutes. Thank you, Jessica. A second? Mr. Chairman, I'll second the motion. Thank you, Malia. Today, we have four proposals for consideration and one individual shareholder proposal. Starting with the first proposal, your Board of Directors recommends the election of 11 directors for a one-year term expiring at our next annual meeting in 2027. They include Steven Boyd, Scott Clark, Howard Coker, Pamela Davies, Theresa Drew, Philippe Guillemot, John Haley, Robert Hill, Eleni Istavridis, Richard Kyle, and Craig Nix. I've been advised by the Secretary that there were no other nominations submitted. Do I have a motion?
Mr. Chairman, I move that the Directors be elected pursuant to the proxy statement.
Thank you, Lauren. A second?
Mr. Chairman, I second the motion.
Thank you, Steve. Our second proposal is for the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending 2026. Do I have a motion?
Mr. Chairman, I move to ratify PricewaterhouseCoopers LLP for the year ending 2026.
Thank you, Raj. A second? Mr. Chairman, I second the motion. Thank you, Deborah. The third proposal is an advisory non-binding approval of compensation of the named executive officers as provided in the proxy. Do I have a motion?
Mr. Chairman, I move to approve the advisory resolution on executive compensation.
Thank you, Susan. A second?
Mr. Chairman, I second the motion.
Thank you, Howard. The fourth proposal is to approve an amendment to the 2024 Omnibus Incentive Plan as detailed in the proxy. Do I have a motion?
Mr. Chairman, I move to approve the amendment number one to the 2024 Omnibus Incentive Plan.
Thank you, Bob. A second? Mr. Chairman, I second the motion. Thank you, Murphy. The final item is an advisory non-binding shareholder proposal entitled Avoid Brand Damage from Political Spending, which is outlined in the proxy. I would point out that your Board has recommended a vote against this resolution as fully described again in the proxy. Is there anyone here who would like to speak for or against this proposal?
Hi, my name is Charity, and I will speak for the proposal. Avoid Brand Damage From Political Spending. Shareholders request that Sonoco Products Company provide a report updated annually disclosing the company's, 1, policies and procedures for making contributions to, A, participate in any campaign on behalf of any candidate for public office, or B, influence the general public with respect to an election. 2, monetary and non-monetary contributions and expenditures used in the manner described in section 1 above, including the identity of the recipient as well as the amount paid to each. The report shall be presented to the Board of Directors and posted on the company's website. This proposal does not encompass lobbying spending. A company's reputation, value, and bottom line can be adversely impacted by political spending.
The risk is especially serious when given to trade associations, super PACs, 527 committees, and social welfare organizations, groups that routinely pass money to or spend on behalf of candidates and political causes that a company might not otherwise wish to support. A recent poll of retail shareholders by Mason-Dixon Polling & Strategy found that 80% of respondents said that they would have more confidence investing in companies that have adopted reforms that provide for transparency and accountability in political spending. Sonoco scored only 3% out of the possible 100% in the CPA-Zicklin Index of Corporate Political Disclosure and Accountability. In its statement next to this proposal, Sonoco failed to name one small step taken to improve its 3% score on the scale of 100%.
Without knowing the recipients of Sonoco's political dollars, Sonoco directors and shareholders cannot sufficiently assess whether Sonoco's election-related spending aligns with or conflicts with its policies on climate change and sustainability and other areas of concern. Please vote for this important reform. Avoid brand damage and political spending.
All right. Thank you. If there are any other shareholders holding a ballot, which I don't believe there are, please hold them up at this time. Mr. Secretary, please report on the preliminary tabulation by the inspectors on the voting of the proposals and resolutions presented at this meeting.
All right. The moment of truth. I feel like we should have a commercial break or something before I reveal this. Obviously, as I noted, we had a large number of proxies submitted before the meeting, so that's great, a ton of shareholder engagement, which is fantastic, and of course, seeing so many shareholders live here today. Without further ado, Mr. Chairman, the Inspectors of Election have reported. Shareholders voted to elect all nominees for Director, voted by a majority to ratify the selection of PwC as the Company's independent public accounting firm for the fiscal year ending December 31st, 2026. Shareholders approved the advisory resolution on executive compensation and the Amendment Number 1 to the 2024 Omnibus Incentive Plan. Lastly, the shareholder proposal entitled Avoid Brand Damage from Political Spending, again, failed to receive majority support.
Thank you, John. This concludes the business portion of the meeting. At this time, we invite you to watch a short video. I will turn the podium over to Howard Coker, our President and CEO, who will provide an update on the state of the company.
If you don't know where you're going, any road will take you there. When it comes to realizing a vision and reaching a specific destination, you can't overestimate the importance of focus. Sometimes, in the midst of change, it can be hard to clearly see the path forward and the purposeful strategy guiding the way. Decisions that may seem disconnected are, in fact, deliberate and have been designed to help determine the future. At Sonoco, we know where we're going and the road that will take us there. We've been thoughtfully transforming our business and firmly believe our future is in focus, a future defined by a focus on simplifying our structure, optimizing our portfolio, maximizing our assets, and concentrating our customer base. We're leveraging our manufacturing and technology legacy in fiber-based packaging, and we've transitioned into strategically advantaged metal packaging.
Combined, we're uniquely positioned to drive increased productivity and operational efficiency, expanded margins, a greater share of customer, and greater returns on disciplined capital allocation. Fine-tuning our focus has a multiplier effect across our business. A greater focus on fewer, larger customers in more disciplined markets creates the opportunity for higher asset utilization rates and increased economies of scale. This level of customer concentration also builds the foundation for long-term, value-added relationships based on elevated quality, service, and customer intimacy, rather than short-term transactions. A more focused solutions portfolio creates an environment where we can be product-agnostic, making us even more customer-centric. A company that has been successfully serving customers and returning value to stakeholders for over a century doesn't happen by accident. A focus on nurturing people, purpose, adaptability, and the courage to reinvent ourselves, these qualities are in the fabric of our DNA.
They are what make our company unique. Our past is proof of our ability to navigate our future, and our future at Sonoco is clearly in focus. Sonoco, a future in focus.
Well, good morning, and thank you all for joining us today. Sonoco has transformed over the past several years to create a more focused, simplified, and stronger company. I've been at Sonoco for over four decades and have experienced a wide range of economic cycles, changing competitive dynamics, and shifting consumer trends, but I have never been more excited about the opportunity we have for the next phase of our growth. What gives me confidence today is not just optimism, but clarity around our portfolio, our strategy, and our ability to execute through cycles. Before I go further, let me remind you that 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 vary materially.
For more information, visit the Investor Relations sections of sonoco.com. Now, with that out of the way, let me talk about my favorite subject, Sonoco. Our scaled, well-capitalized asset base underpins our belief that Sonoco is the investment of choice in packaging. We are global leaders in high-value paper and metal cans, as well as uncoated recycled paperboard and converted products. Significant investments in our operations, systems, and people position us to drive improved profitability. Our streamlined portfolio, supported by our proven operating models, enables accelerated margin expansion and consistent earnings growth. We focus on essential center-of-the-store food categories and partner with large growing brands and private-label customers. With more than 125 years of value creation, strong cash flow generation, and disciplined capital allocation, we are investing for growth, strengthening our balance sheet, and returning capital to our shareholders.
Today, Sonoco has grown to a $7.8 billion global packaging leader with 22,000 team members working in 265 facilities across 37 countries, serving some of the world's best-known brands. Guided by our purpose of Better Packaging, Better Life, we strive to foster a culture of innovation, collaboration, and excellence to provide solutions that better serve our customers. Over the past several years, we have balanced our geographic sales mix, growing in the EMEIA region, which now accounts for approximately 40% of sales, while we still maintain half our revenue right here in the United States. We believe there are significant economies of scale in our global platform, particularly in Consumer Packaging, that are a significant competitive advantage to serve large global customers with complex needs.
In 2020, only 42% of our sales came from consumer packaging, while 44% was industrial, and the remainder of sales came from a variety of diversified businesses. Since then, we have purposefully shifted our mix to more consumer-focused today. More than 2/3 of our sales are generated by our leadership positions in paper and metal cans. The remaining 1/3 of our sales comes from our leading position in uncoated recycled paper or uncoated recycled paperboard and associated converted products. Furthermore, in our uncoated recycled paperboard business, approximately 70% of our paper product sales are in consumer staple durable end markets. I've been asked many times why we went through this transformation, and the objective was straightforward, to improve the quality, predictability, and durability of our earnings and cash flow for the long term. Early in our transformation, we increased investment in technology and innovation in our core operations to drive growth and efficiency.
We then reshaped our portfolio by exiting non-core businesses that we recycled that capital to acquire and create scale in our market-leading segments. By the end of our journey, we reduced the number of our highly diversified businesses from 20 to two core segments. We simplified our operating systems and concentrated our resources where we can best drive profitable growth. Today, our foundation is set, and the transformation of our portfolio is complete. Since we began this journey in 2020, we've grown revenue by 50%. We've increased adjusted EBITDA by 67% and expanded adjusted EBITDA margins by 200 basis points. Adjusted earnings grew 50% during this period. We generated over $3 billion in operating cash flow and returned $1.2 billion to shareholders through dividends and share repurchases. I am pleased to report that the state of Sonoco is strong and growing.
In 2025, net sales from continuing operations increased 42% to $7.5 billion, driven primarily by the acquisition of Eviosys, our metal packaging business in Europe. Adjusted operating profits rose 67% to $955 million, and adjusted EBITDA reached over $1.3 billion, an increase of 28%, while margins expanded 120 basis points to just under 17%. GAAP net income attributed to Sonoco was a record $1 billion or $10.7 per share due to gains from the sale of divested businesses, and adjusted earnings increased 17% to $5.71 per share. Finally, operating cash flow was $690 million, including $216 million of one-time expenses of taxes paid on capital gains from divestitures. While our results in 2025 were strong, we believe there is much more we can accomplish by focusing on our strategic priorities, sustainable growth, margin improvement, and efficient capital allocation.
The key to our success over the next few years will be our ability to control the controllables. As we look ahead, margin expansion remains one of the most important value drivers in our financial outlook. We're targeting approximately 200 basis points of margin expansion by the end of 2028, which equates to roughly $150 million-$200 million of incremental value. This is not dependent on a single initiative or change in market condition, but rather the result of a coordinated enterprise-wide productivity system that is already embedded in how we operate. Roughly $20 million-$30 million of this improvement is expected to come from structural simplification and cost alignment, as we continue to reduce complexity and align our cost base with the portfolio we operate today. Beyond that, the majority of the opportunity sits within operations, where we're targeting $130 million-$170 million through commercial excellence and operational improvements.
These targets are embedded in our operating plan, reviewed regularly through our finance governance process, and tied directly to management accountability. Now, let me switch gears and provide a brief update on our two operating segments, starting with Industrial Paper Packaging. This is our foundational business, which dates back to 1899 and has been transformed into the low-cost leader in uncoated recycled paperboard and converted products. Today, our Industrial Segment generates approximately $2.4 billion in sales, operating across 25 countries and around 9,000 employees. 73% of our sales are from North America and 16% from EMEA. While we call this the Industrial Business, about 65% of our products support customers in consumer-facing markets. Our Industrial Team is coming off a record earnings performance in 2025 and has a track record of consistently driving solid EBITDA and cash generation.
Since 2020, the Industrial business has grown Adjusted EBITDA 71%, while expanding margins by 615 basis points, through a strong focus on customer value creation, strategic acquisitions, footprint leverage, and a robust internal productivity process. Our Paper business is vertically integrated, from fiber collection through our strategic mill network and into paper converting. We produce approximately 2 million tons per year, which are split 52% for internal use and 48% for external. Our internal versus external sales balance is a result of positioning to deliver the highest value for the products we make based on the end markets we serve. In some markets, like tissue and towel, the majority of the value is in papermaking and less in converting. In other markets, like tubes and cores or paper cans, we deliver critical value add across papermaking and converting.
As a result, we have reoriented our business towards more stable consumer end markets. We continuously pursue new opportunities for growth through innovation, entering new markets that reward us for technology, quality, and service to our customers. Our entry into the high-pressure laminates market is a great example. Recognizing an unmet need, we developed a URB replacement for Saturated Kraft that supports high-pressure laminate products used in countertops, flooring, composite boards, and decorative panels. This new product, which we believe can grow to between 20,000 and 30,000 tons per year, is a great example of how our chemists and our process and paper engineers work together to develop new value-added products. Another exciting area for us and one of the strongest organic growth engines in our portfolio is in producing reels for the fast-growing North America wire and cable market.
We've doubled sales over the past five years in this business, driven by an explosion in the build-out of power grid infrastructure needed for new data centers, mostly servicing artificial intelligence. To meet growing demand, we've invested to add a new nailed wood reel production line at our Hartselle, Alabama facility, which will increase production capacity by 15%. This new line is expected to be operational by the end of the second quarter and will give us the most state-of-the-art automated production capabilities for reels in the world. Last year, we grew in this business by 15%, and we are projected solid double-digit growth this year as the new capacity comes online. Now let me switch to our fast-growing Consumer Packaging segment. This segment now accounts for 2/3 of our consolidated sales or $5 billion annually. Today, we're one of the largest global producers of metal and paper cans.
We operate in 100 facilities in 25 countries. Today, Sonoco produces more than 12 billion steel, food, and aerosol cans in both two-piece and three-piece formats, along with closures and components. Whether you're in the center aisle of a local grocery store or working on a do-it-yourself project on a Saturday afternoon, our cans are likely to be well represented. Within our leading paper can portfolio, we provide solutions for global markets like baby formula, snacks, chilled dough, nuts, and more. For decades, we have partnered with some of the best-known global brands to innovate every component of our can to satisfy the sustainable packaging consumers want and need. In addition to our metal and paper cans, we've also invested in expanding our footprint and capabilities to provide cartridges that serve the adhesives and sealant space within this construction market.
Our Consumer Packaging earnings growth is a story of leadership, focus, and opportunity. We substantially grew earnings in 2025 following the acquisition of Eviosys and with strong performance from our Metal Packaging business right here in the U.S. As we look forward, shoppers aren't pulling back, but they are rebalancing. Inflation, slower job growth, and tighter markets are reshaping budgets, while more and more U.S. adults are now using weight loss drugs, which is driving diverse shopping baskets and new eating behaviors. This is exactly where Sonoco thrives. The majority of our consumer volume sits in the center of the store, where consumers turn for value for meals that stretch further. As budgets tighten and eating patterns change, Sonoco is uniquely positioned to help brands rethink pack size, formats, and overall shelf execution.
These moments of disruption create opportunity, and they play directly into our strength in helping our customers win on the shelf and protect volume. Few partnerships illustrate this better than Bush's, where we are co-located on their site in Chestnut Hill, Tennessee. As the market evolves, Bush's Beans protecting volume through premium promotions, like its new Bush's Bluey Beans collaboration, designed to bring more consumers into the category. Our co-located model has expanded our two-piece food can capabilities and enables daily collaborations with their team, helping move faster to the shelf, drive demand and create value for both our companies. Our paper cans serve resilient, diverse, and growing categories and geographies. Pringles is a flagship example. Working together, we moved the can to over 90% recycled paper content without compromising shelf life, manufacturing speed, or most importantly, consumer experience.
Recently, I was honored to join our team in Asia for the grand opening of our new operation co-located with Pringles in Nong Khae, Thailand, located about 60 mi southeast of Bangkok. This new can plant has started up two lines to serve stack chip growth in Asia and should ultimately become the largest paper can operation in the region. Our focus on sustainability excellence remains an important initiative for many of our customers and shareholders. In February, we announced that a virtual purchase power agreement between Sonoco and ENGIE North America, consisting of 60 wind turbines in Crockett County, Texas, has become operational. This project is another step in Sonoco's integrated sustainability efforts to reduce our global carbon emissions by 25% before 2030 by improving packaging design, installing energy-efficient equipment, and renewable energy sources such as solar panel installations.
At Sonoco, we believe that people build businesses by doing the right thing at work, at home, and in our communities. By partnering with nonprofits, community organizations, and other charitable entities, we empower our employees to share their time, talent, and resources to help build stronger, more sustainable communities. Recently, we launched Sonoco in Action to bring our charitable efforts under one unified umbrella. Our mission is to uplift local communities by investing in initiatives that support youth education, development, and health. Let me pause to show a brief video of our Sonoco in Action efforts. For generations, Sonoco has supported the communities where we live and work. In 2024, we realized we could do even more and do it in a more focused, intentional way. That's why we created Sonoco in Action.
Sonoco in Action brings all of our giving and volunteer efforts together under one clear purpose, to support children and families in the places we call home, and to make sure no child feels overlooked. This isn't about programs on paper. It's about people. Through Sonoco in Action, we built focused initiatives to strengthen our community impact. The Sonoco Gives Fund provides grants to nonprofit organizations making a meaningful difference, including the Trent Hill Center for Children and Families, a safe haven for teens in foster care, and Cypress Adventures, an after-school teen leadership program. We also proudly support organizations like the Boys & Girls Club, The Red Cross, the American Heart Association, United Way, and many others.
Another key initiative is the Sonoco Community Fund. It supports programs that bring our people together, strengthening local connections through mentoring and hands-on community engagement.
We mentor 67 Hartsville students.
We support 19 local schools.
We collaborate with nine higher education institutions.
We sponsor 10 recreational sports teams.
We partner with 52 nonprofit organizations.
It's really not about the numbers. It's about who those numbers represent.
Today, our volunteer and community initiatives are mainly focused in and around the Hartsville area. However, our long-term objective is to expand these efforts and embed these values and practices across all of our facilities. Sonoco in Action is about more than giving. It's about being present, being compassionate, and being committed.
I want to sincerely thank our Sonoco teammates for supporting Sonoco in Action, and for investing in a future that strengthens our communities, creates opportunities, and reflects our shared values.
Sonoco in Action, real people, real care, real impact.
Okay. Well, let me close by focusing on our high-level targets for the next several years. We expect future organic growth for our consumer and industrial business to be around GDP in aggregate. As mentioned earlier, we're targeting around 200 basis points of margin improvement, which will result in between $150 million and $200 million in savings by the end of 2028. Finally, we expect to achieve cumulative three-year operating cash flow of approximately $2.5 billion, while reducing our long-term net leverage ratio to below 2.5 times. One thing that has not changed at Sonoco is our commitment to the dividend.
Sonoco is one of only a handful of companies that has paid consecutive quarterly dividends for more than 100 years. I'm pleased to announce that your Board of Directors today approved a 2% increase in the dividend, raising the quarterly payout to $0.54 per share to be paid on June 10th, 2026 to shareholders of record on May 8th. This will be the 43rd consecutive year that Sonoco increased the annual dividend. It provides a solid yield of nearly 4%, double the payout of the S&P 500. On behalf of the entire Sonoco Team, I want to thank you for your investment, your support of your company. Everything you've heard today ties back to one thing, focus. We are a more focused organization. We're deploying capital where it matters most. We have more levers to create value than ever before.
Bottom line, we're positioned not just to compete, but to win. With that, I'll be happy to answer any questions that you may have. Seeing no questions, we thank you for your attendance, and our Chairman has signaled to me that we do stand adjourned.