Michael Roxland • Truist Securities

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CFO Michael Casamento stated that the fiscal 2026 guidance is prudently based on an assumption of broadly flat volumes. Regarding the beverage business, he confirmed that while elevated costs are expected to persist in Q1, the overall base business earnings should be in line with the prior year, with synergy delivery driving growth.

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CEO Peter Konieczny explained that the complementary resin portfolio is an advantage, as it allows the combined entity to harmonize terms to match the more favorable terms of the larger buyer in each category. CFO Michael Casamento detailed the robust synergy vetting process, which included external consultants, benchmarking, and stress-testing by dedicated integration teams.

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CEO Peter Konieczny stated there have been no surprises during due diligence and that everything is proceeding as expected, with growing confidence in the synergy targets. CFO Michael Casamento addressed the cost question, explaining that the company continues to focus on operational efficiency, managing labor and shift patterns, and is still realizing benefits from prior restructuring programs, with another $7 million expected in the second half. These actions are factored into the full-year guidance.

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CFO Michael Casamento acknowledged that near-term margin improvement could exceed the historical algorithm but affirmed that 20-30 basis points remains the appropriate long-term target. He explained that while the cost base is flexible, factors like portfolio mix, product innovation, and sustainable structures will continue to drive margin performance over the cycle, which can fluctuate from year to year.

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EVP & Chief Resource Officer Douglas Long confirmed improved pricing in the Pacific Northwest, attributing it to anticipation of duties and a better quality residual portfolio, a point echoed by President & CEO Mark McHugh. Long noted a lag is expected before the full price impact of duties is felt. McHugh detailed the capital allocation strategy, emphasizing a nimble, opportunistic approach focused on long-term value. He stated that given the current stock price, share repurchases are the most compelling use of capital, with over $500 million available for deployment while maintaining a leverage target below 3x net debt to EBITDA.

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SVP & CFO April Tice stated that while recent realignment actions are done, scrutinizing expenses is a continuous effort. EVP & Chief Resource Officer Douglas Long noted it's too early to assess the U.S. Gypsum project's impact. On political risk, Mr. Long expressed confidence in the durability of initiatives like CCS and solar, citing bipartisan support and strong underlying demand drivers independent of the IRA.

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Chair & CEO Brad Southern attributed the OSB performance to two key factors: outstanding operational equipment effectiveness (OEE) and aggressive cost containment measures implemented as the market weakened. Regarding home sizes, Southern acknowledged it as a slight headwind but stated that the significant market share opportunities in Siding across various end markets would overwhelmingly offset this impact.

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CFO Alan J. Haughie stated that the company's forecast is typically conservative and that he sees potential upside to second-half margin guidance, as previously feared inflationary costs have not materialized. He anticipates margin expansion in 2026 since the financial impact of new capacity won't occur until at least 2027. CEO William Southern added that while the OSB market is currently absorbing new capacity, he remains bullish on the business long-term.

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CEO William Southern confirmed the Lennar agreement is performing at or above expectations and is fully ramped. He also stated that LP's strategy is to pivot towards margin-accretive Structural Solutions when commodity OSB pricing is soft, and the company plans to grow this segment further in 2025.

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CEO Brad Southern characterized the competitive environment as 'normal,' emphasizing that LP is winning based on the SmartSide value proposition rather than pricing concessions. Executive Aaron Howald added that overall Siding mill utilization was in the high 70s to 80% range in Q3, which supports the decision to add future capacity.

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CEO & Chairman Andrew Silvernail noted that structural changes in Europe require a formal consultation process but affirmed a commitment to making tough decisions to build a strong business. He said the team is excited to win, though the changes are difficult for impacted employees. On pricing, he clarified that financial assumptions are based on the first price increase of the year holding, with no contribution assumed from a potential second increase.

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Executive Andrew Silvernail explained that share gains are occurring in the local customer segment, driven by significant investments in service and reliability, which improved on-time delivery from the high 80s to the high 90s. He noted that while current market weakness allows them to pull forward some planned footprint optimizations, the company's long-term strategic plan remains intact, as he does not foresee a permanent structural change in demand.

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Executive Andrew Silvernail detailed a strategy of focusing investment on profitable customers, products, and assets while divesting or closing underperforming ones, guided by an 80/20 principle. Regarding culture, he stated there was enormous pent-up demand for change and that the team is capable and eager to win but was previously held back by bureaucracy, which he is now addressing to 'take the handcuffs off'.

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Chairman and CEO Andy Silvernail explained that the productivity gains drive over 60% incremental contribution margins, which enables reinvestment. He confirmed the philosophy can be applied to the mill system, citing examples like improving winder safety and efficiency. Silvernail announced plans for 'lighthouse' pilot programs in 2025 for both box plants and mills. Regarding portfolio optimization, he stated that the company is evaluating its entire portfolio to de-emphasize commoditized, capital-intensive businesses and reduce earnings volatility.

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Chairman and CEO Andy Silvernail advised focusing on the 60%+ incremental contribution margins from productivity gains, which will be reinvested, rather than specific box plant EBITDA. He confirmed the methodology applies to mills, citing technology improvements at winders as an example. For 2025, IP will create 'lighthouses'—best-in-class examples at select mills and plants—to guide the rollout. Regarding portfolio optimization, Silvernail stated they are looking across the entire portfolio to deemphasize commoditized, capital-intensive businesses and create a more integrated, less volatile company.

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President & CEO Adam Greenlee clarified the bankruptcy is a 'very discreet item' specific to one long-term requirements customer, and the balance of the pack business is performing well. He stated with pride that the team had been preparing for this possibility for years and successfully mitigated any direct financial loss from the filing. He asserted this is not a rebasing of the business's EBITDA, as Silgan would either fill the low-cost assets with other volume or take out costs if necessary.

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CEO Adam Greenlee confirmed that the positive momentum from Q1 continued into April, with the quarter starting as expected and May order books looking strong. He clarified that while Silgan is winning new business across all DSC segments, a specific large win previously mentioned is in a beverage application. The capacity for this win will come online late in 2025, with the volume benefits primarily impacting 2026.

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CEO Adam Greenlee and EVP Bob Lewis emphasized that the high-margin, high-growth DSC segment remains a priority for capital allocation, with healthcare being a key focus area. Regarding metal cans, Adam Greenlee stated that with approximately 90% of the business under long-term contracts and a recent extension with its largest customer, the company is largely insulated from market volatility and sees no significant change in competitive dynamics.

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CEO Gordon Hardie indicated that the Americas order book looks strong and parts of Europe are showing signs of recovery. He detailed a mixed demand environment, with weakness in European spirits and U.S. beer but strength in non-alcoholic beverages and food. Regarding TOE, Hardie explained the program systematically identifies and eliminates top sources of waste and inefficiency in plants, leading to significant productivity gains, and he expressed high satisfaction with the progress and team adoption.

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CEO Gordon Hardie reported strong Q1 volumes across most categories in both the Americas and Europe, with notable strength in beer, food, and spirits. He stated that while order books are good, tariff uncertainty persists. Regarding France, he explained the operational review is part of a strategy to align assets with market opportunities, specifically by focusing on the growing premium wine and spirits segments.

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CFO John Haudrich clarified that mid-teens segment profit margins (high-teens to 20% EBITDA margin) are a medium-term target, with the high end of that range achievable by 2027. CEO Gordon Hardie noted that SG&A reduction alone accounts for a significant part of the margin gap with peers. Regarding closures, Hardie explained that while MAGMA could offer future flexibility, the current focus is on proving its industrial scale and economic returns at the new Bowling Green plant, which will inform future network configuration decisions.

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CEO Tony Smurfit clarified that the 40% improvement refers to both the number of plants moving from loss to profit and the overall reduction in losses. He explained this was achieved by systematically exiting uneconomic contracts, a process that is ongoing with about 60% of loss-makers still to be addressed. Regarding Europe, he stated that current paper pricing is unsustainable for non-integrated players, leading to competitor capacity closures, which supports the view that the market is near a bottom.

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CEO Tony Smurfit clarified the 2H demand assumption is for performance to be 'somewhat similar with a little bit of upside.' CFO Ken Bowles explained the synergy timing is consistent, with some benefits realized in late 2024, leading to the $350 million in-year figure for 2025 while still achieving the $400 million run rate. He noted the Q2 downtime will be taken 'across the system generally' rather than in one specific area.

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CEO Tony Smurfit explained the 40% improvement refers to both the number of plants moving from loss to profit and the overall reduction in losses, driven by systematically exiting uneconomic contracts. He noted about 60% of the loss-making plants still present an opportunity. Regarding Europe, Smurfit stated that current paper pricing levels are unsustainable for non-integrated players, leading to capacity closures which will stabilize the market.

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EVP & CFO Stephen Scherger attributed the lower inflation to decelerating costs for resin, recovered fiber (OCC), and logistics in Q2. Regarding Waco, he explained that while the initial investment is higher, their long-term outlook for returns remains strong or better, as they expect the facility's cost-to-produce advantages and input cost benefits (like lower OCC costs) to ultimately deliver returns at or above original expectations.

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CFO Stephen Scherger stated the long-term cash flow trajectory remains intact, driven by a significant, 'undeniable' reduction in CapEx after this year. CEO Michael Doss added that of the incremental Waco EBITDA, nearly $100 million comes from fixed cost removal from closing older mills, with the remaining $60 million from incremental volume, which he feels confident in due to recent competitor capacity removals balancing the market.

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CEO Devin Stockfish confirmed EWP operating rates would be lower in Q3 due to market conditions but could be increased if demand improves. He declined to give a specific EBITDA forecast, instead directing the analyst to the company's provided price sensitivities for lumber and OSB, and noted that prices are not expected to remain at unprofitable levels long-term.

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CEO Devin Stockfish expressed confidence that the long-term momentum for renewables and carbon solutions will continue despite potential policy shifts, noting that a full repeal of the IRA is unlikely. Regarding the new facility, he confirmed that extensive in-house testing on using Southern Yellow Pine for TimberStrand has been successful. He also stated that EWP operating rates are expected to increase in Q1 from the low-70% range seen in Q4.

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CEO Devin Stockfish clarified that EWP operating rates would be up slightly in Q4 from the Q3 mid-60s level. He then stated that he would expect rates to ramp back up in Q1 to a more normal operating posture in the high 70s to low 80s range, in line with the typical start of the spring building season.

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COO Rodger Fuller reiterated that SMP EMEA's EBITDA would be up year-over-year but did not confirm a specific figure, expressing long-term confidence. CFO Paul Joachimczyk explained that the EPS guidance was lowered to the low end of the range primarily due to higher-than-expected interest expense in H1, while strong North American performance supports the maintained EBITDA range.

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COO Rodger Fuller explained that network optimization focuses on the global metal can business to find the lowest-cost production locations. President and CEO Howard Coker described the Eviosys guidance as conservative. Fuller also detailed the successful integration efforts, noting the new team is pleased with a strategic buyer and that retention discussions are going well, supported by Sonoco's culture. He also raised the 2025 synergy run-rate target to $40 million.

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COO Rodger Fuller explained that the strategy for Europe mirrors the successful North American playbook: investing in low-cost mills while rationalizing high-cost capacity. On integration, Fuller reported it is proceeding 'great,' with a strong cultural fit and focus on sharing best practices and leveraging global procurement. He expressed confidence in achieving the $100 million synergy target by the end of 2026, despite a late start due to regulatory delays.

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President & CEO Timothy Donahue defended the current margin levels, arguing that past returns were unacceptably low. He stated that given the significant capital and operational expertise required to run plants at high efficiency, it is incumbent upon Crown to achieve an adequate return for its shareholders. He suggested that current margins are only now beginning to approach what they should be, regardless of historical levels.

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President and CEO Timothy Donahue clarified that the non-reportable segment includes food cans, aerosol cans, and equipment. He noted that food can performance has been stable to up, benefiting from a well-balanced portfolio with significant presence in pet food and vegetables, which did well in the quarter. This was a recovery from a soft prior-year quarter. The improvement was partially offset by a downturn in beverage can equipment orders and subdued aerosol can demand.

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EVP & CFO Larry Hilsheimer attributed higher SG&A to increased incentive compensation, the IPAC Chem acquisition, and currency effects, stating a long-term goal of getting SG&A below 10% of sales. He quantified that a $10/ton change in URB pricing impacts EBITDA by about $530,000 per month. Regarding CRB, Hilsheimer explained the remaining machine is a swing machine, and CEO Ole Rosgaard added they will continue to optimize paper grades for the highest return.

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CEO Ole Rosgaard reported that total boxboard demand is flat year-over-year, with the URB ad protection segment being the softest while tube and core products are up. He stated that a significant demand driver is unlikely until the broader paper market sees an inflection. CFO Lawrence Hilsheimer declined to comment on future potential mill closures, stating that the company is reviewing its entire footprint but will not speculate on specific locations due to the impact on employees.

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CFO Larry Hilsheimer stated the guidance does not include the announced containerboard price increase. He noted that while URB demand is stable, it has not seen a significant pickup, and the company does not comment on future pricing. CEO Ole Rosgaard added that as a smaller player in containerboard, Greif is not involved in any discussions to change the industry's index-based pricing model.

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CEO Ole Rosgaard clarified the reorganization is not designed to reduce headcount but to operate more effectively, allowing for volume growth without adding staff. He attributed GIP's outperformance to a long-term focus on 'legendary customer service' and superior product quality, which builds lasting customer relationships. CFO Larry Hilsheimer stated that approximately 35% of URB customers are non-indexed and confirmed the company has had 'great success,' close to 100%, in implementing price increases with that customer base.

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CEO Daniel Fisher acknowledged that North American margins are at a "high-water mark" and the goal is to maintain them through efficiency gains while partnering with customers on affordability. He noted that while specialty cans are growing, the focus on affordability could increase the role of standard 12-ounce cans, particularly in the beer segment.

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CEO Daniel Fisher stated that current contract pricing is healthy and better than it has been for most of the last 20 years, despite some regional overcapacity. On beer, he was uncertain of the exact timing for an inflection but expects aggressive marketing in the peak season and believes partners with a balanced portfolio of beer and other beverages will succeed.

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CEO Daniel Fisher described North American shipments as okay in August but slowing in September, a trend that continued into the start of Q4. He clarified the portfolio strategy is not just about beer, but about the broader alcohol category and partnering with companies that have the best overall portfolios. He reiterated that historically, beer has offered better margins, and the substrate shift from glass to cans still provides a growth runway within that category.

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President and CEO Dustin Semach clarified that urgency is demonstrated by accelerating transformation programs, such as expanding go-to-market strategies globally and enhancing leadership. He pointed to sequential volume improvements and EMEA's best quarter since 2021 as proof of progress. Regarding divestitures, Semach stated that the company does not see large portfolio shifts at this time, emphasizing that the breadth of the portfolio is a key competitive advantage with distributors.

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CEO Dustin Semach clarified that the difference in progress was not intentional but a result of the Food segment's structure being established more quickly. He attributed the slower pace in Protective to its inherent complexity, with multiple portfolios across many geographies. He highlighted the recent North American go-to-market transformation in Protective as a positive step, acknowledging that more work is needed to cascade the changes through the complex organization.

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CEO Dustin Semach explained that the difference in progress was not intentional but a result of the Protective segment's greater complexity, with multiple portfolios across many geographies. He stated that the structural changes in Food were implemented more quickly. However, he highlighted the recent North American go-to-market transformation in Protective as a material step forward that has received positive feedback, acknowledging that more work remains to fully embed the changes throughout the organization.

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CEO Patrick Kivits stated the reorganization is focused on operational effectiveness but provides future optionality. President and CFO Dustin Semach attributed the strong Food margin to higher volume growth and network utilization. He expects the segment to continue operating in the "low 20s" margin range, with potential for reinvestment of any outperformance.

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President and CEO Eric Cremers clarified that the Q1 Southern harvest outperformance was due to favorable weather and strong stumpage demand, not hurricane salvage. He estimated the immediate potential for solar is 70,000-75,000 acres, with a timeline stretched by grid operator backlogs. He reconciled production and demand by explaining that while demand isn't growing rapidly, it is stable and expected to grow slightly, and PotlatchDeltic's efficient new capacity will find a home by displacing higher-cost competitors.

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CEO Oliver Graham explained the volume improvement was largely due to being on the 'right side' of a favorable customer mix and a broader recovery in the energy drink category. Regarding future contracts, he stated that discussions are progressing well with no material risk anticipated to volumes or margins. He believes the market remains rational and noted that standard can pricing did not increase dramatically during the pandemic, limiting customers' incentive to seek significant price reductions.

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CEO Oliver Graham stated that North American promotional activity is comparable to last year but still below pre-pandemic levels, yet CSDs in cans continue to show growth. He described the quarterly shipment cadence as a strong July, a weaker August against a tough prior-year comparable, and a September that was in between, with October trending similarly.

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CFO Kelly Hibbs attributed the strong Q4 BMD margin to increased warehouse sales driven by market uncertainty and tailwinds from a commodity price run-up in the first half of the quarter. He guided that Q1 margins will see erosion due to a slower sales pace and the absence of similar tailwinds. Regarding LVL volume growth, Hibbs credited the strong execution and combined efforts of the Wood Products and BMD sales teams. CEO Nate Jorgensen added that growing home design complexity supports steady demand for LVL in beam and header applications.

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CFO Kelly Hibbs stated that BMD's daily sales pace was steady throughout the quarter, with September's lower total sales attributed to fewer sales days. Jeff Strom, Head of BMD, noted that dealers are proceeding cautiously and will lean on distribution amid seasonality. CEO Nate Jorgensen explained that there has been no significant shift from EWP to lumber, as builders prioritize the cycle time and simplicity benefits offered by EWP systems.

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