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Sonoco Products Co. (SON)

April 17, 2013 11:00 am ET


Harris E. DeLoach - Executive Chairman and Member of Executive Committee

Ritchie L. Bond - Vice President, Secretary and Treasurer

M. Jack Sanders - Chief Executive Officer, President, Director and Member of Executive Committee

Unknown Attendee

[Presentation] Please welcome to the stage Sonoco Executive Chairman, Harris DeLoach.

Harris E. DeLoach

Thank you very much, and good morning. On behalf of your Board of Directors and the Sonoco Management Team, welcome to Sonoco's 2013 Annual Meeting. We thank each of you for being here this morning. And in addition to the hundreds of shareholders here in Hartsville this morning, we're joined by shareholders around the world via the Internet on

And we begin the meeting today by introducing the members of our Board of Directors and asking each to stand and remain standing until everyone is introduced. And I would ask that each of you hold your applause until everyone has, in fact, been introduced.

Dr. Pamela Davies. Dr. Davies is President of Queens University of Charlotte, North Carolina.

John Haley. John is the Chief Executive Officer of Gosiger Incorporated, a privately owned distributor of machinery tools and factory automation systems in Dayton, Ohio.

Ed Lawton. Ed is President and Treasurer of Hartsville Oil Mill of Darlington, South Carolina.

Jack Linville. Jack is an attorney in private practice in New York City.

Jim Micali. Jim is a Senior Advisor and Limited Partner of Azalea Fund III, a private equity firm in Greenville, South Carolina, and Jim retired as Chairman and President of Michelin North America and is Sonoco's lead director.

John Mullin. John is Chairman of Ridgeway Farms of Brookneal, Virginia. And unfortunately, John is not with us this morning due to a prior conflict that he could not change.

Lloyd Newton. General Newton was Executive Vice President of Pratt & Whitney's military engine business of United Technologies and is a retired four-star general from the United States Air Force. General Newton is a native of Ridgeland, South Carolina, and resides in Tampa, Florida.

Marc Oken. Marc is managing partner of Falfurrias Capital Partners, a private equity firm in Charlotte, North Carolina, and previously was Chief Financial Officer of Bank of America.

Philippe Rollier. Philippe is the retired President and Chief Executive Officer of Lafarge North America and resides in Paris, France.

And Jack Sanders. Jack is Sonoco's President and Chief Executive Officer and joined our board in December, and you will hear from Jack in a few moments about the state of Sonoco.

Tom Whiddon. Tom is an Advisory Director of Berkshire Partners, a Boston-based private equity firm, and is a retired executive of the Lowe's Companies and resides in Tampa, Florida.

Let me also recognize several of our other retired directors who are with us today. And I would ask that they stand as well. And please remain standing, Charlie Coker. First is Charlie, who served on our board from 1961 to 2005, including serving as Chairman from 1976 to 2005.

Fitz Coker. Fitz served on our board from 1964 to 2007.

Kirk Dunlap. Kirk served for 20 years, from 1972 until 1992.

Jim Fort. Jim served for 30 years, from 1969 to 1999. Edgar Lawton, a board member of 32 years from 1968 to 2000. And Tom Coxe, a board member from several -- for several decades.

Our current Board of Directors works very hard in representing your shareholding interest. And our retired directors continually -- continue to actively support your company. Please give all of them a warm welcome.

I will now call the business meeting to order and advise you that the annual report, notice of annual shareholders meeting, proxy statement and proxy were mailed on or about March 15, 2013, to shareholders of record as of February 27, 2013, notifying each of the annual meeting to be held today.

The procedure of the business portion of the meeting is as follows. All voting will be done by written ballot, and ballots are available for those who have not submitted a proxy or who might wish to change their vote. We have appointed Elizabeth Kremer of Sonoco and Mark Zimkind of Continental Stock Transfer & Trust Company as inspectors of election, who will tabulate the ballots. Elizabeth and Mark, would you please stand and be recognized?

Mark Zimkind

Good morning.

Harris E. DeLoach

Are there any shareholders wishing a ballot? If so, please raise your hand. The ushers will see that you get one.


Harris E. DeLoach

I didn't see anyone. Our bylaws provide that the presence in person or by [ph] proxy of a majority of the outstanding shares entitled to vote constitutes a quorum. Mr. Secretary, will you please advise if we have a quorum present?

Ritchie L. Bond

Mr. Chairman, I am advised by the inspectors of election that there've been, delivered to the transfer agent prior to this meeting, proxies executed by holders of more than 87% of the outstanding shares entitled to vote. Therefore, a quorum is present.

Harris E. DeLoach

Thank you, Ritchie. The Annual Meeting of Sonoco Products company is duly convened, and we are ready to consider the matters of business.

First, Ritchie Bond, our Treasurer and Corporate Secretary, has the minutes of last year's meeting and is available to read them. As I have said many times, Ritchie is a very eloquent speaker and is certainly more than willing to read the minutes. However, in the interest of expediency, I would be happy to entertain a motion to dispense with this review so that we may move on with the rest of the meeting. Is there such a motion?

Unknown Attendee

Mr. Chairman, I move that [indiscernible].

Harris E. DeLoach

Thank you, Hal [ph]. And is there a second?

Thank you, Mary-Beth. All those in favor, indicate by saying aye.


Harris E. DeLoach



Harris E. DeLoach

Thank you. Ritchie, you get not to do that again, but thank you very much. Ritchie does have the minutes. And if, seriously, anyone would like to review them, he will be able to share them with you after the meeting.

Our next item of business involves resolutions to come before our shareholders. For a shareholder proposal to come before this meeting, it must have been submitted to the Secretary of the company in writing before February 3, 2013, and it must comply with our bylaws.

Today, we have 3 resolutions for consideration. The first is the election of 5 members of our Board of Directors. The second is to ratify the selection of an independent registered public accounting firm. And the third is to vote on an advisory resolution to improve -- to approve executive compensation.

Your Board of Directors recommends the following direction -- directors for election for a 3-year term, expiring at the Annual Meeting in 2016: John R. Haley, John H. Mullin III, Philippe Rollier, Tom Whiddon. In addition, Jack Sanders has been nominated to hold office as director through the next 3 years, after being elected to the board in December of 2012. Jack hasn't had the opportunity to be elected by the shareholders at this point. I've been advised by the Secretary that there were no other nominations submitted.

And do I have a motion on this resolution?

Thank you, Palis [ph]. And do I have a second? Thank you, Ray [ph]. Do any parties wish to speak for or against the motion?

If not, those holding ballots, please vote by marking item 1, if you will.


Harris E. DeLoach

Our second item is the ratification of the selection of PricewaterhouseCoopers LLC (sic) [LLP] as our independent registered public accounting firm for the fiscal year ending December 31, 2013. Your board recommends a vote for ratification. Do I have a motion?

Unknown Attendee

Mr. Chairman, I move to ratify the selection [indiscernible].

Harris E. DeLoach

Thank you, Ray [ph]. And do I have a second? Thank you, Ralph [ph].

Do any parties wish to speak for or against this particular motion? If not, those holding ballots, please vote by marking item 2.


Harris E. DeLoach

The third item is a resolution requiring shareholders to provide advisory approval of compensation for the named executive officers as described in the proxy which was mailed out to you.

Your board recommends that you vote for the advisory shareholder resolution approving executive compensation. Do I have a motion? Thank you, Richard [ph]. And a second? Thank you, Jeff [ph].

Do any parties wish to speak for or against this resolution? Those marking -- those holding ballots, please vote by marking item 3 on those ballots.


Harris E. DeLoach

Will the ushers please collect the ballots, if any? And I haven't seen any, but in the event there are any, and the voting inspectors recalculate the voting percentages, as appropriate.

I want to make you aware that Sonoco will be releasing its first quarter 2013 financial results before the market opens tomorrow, Thursday, April 18. And you're invited to listen to the webcast teleconference between management and the financial community starting at 11:00 a.m. tomorrow, Eastern Standard Time, via the Internet on our website at

Mr. Secretary, would you please report on the preliminary tabulation by the inspectors of voting on the resolutions presented at this meeting?

Ritchie L. Bond

Mr. Chairman, the inspectors of election have reported that our shareholders have voted to approve the nominees for directors and to ratify the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2013. In addition, our shareholders have voted for the advisory resolution approving executive compensation.

Harris E. DeLoach

Thank you, Ritchie. In accordance with the report of the inspectors of election, the nominees for election of directors have been approved and the selection of the independent registered public accounting firm has been ratified. And furthermore, shareholders have voted for the advisory resolution approving executive compensation.

This concludes the business portion of our annual meeting.

You may be interested to know that 2012 marked the 175th anniversary of the birth of our founder, Major James Lide Coker. His proud legacy has been handed down from generation to generation.

After having the honor of serving as your Chairman for the -- and Chief Executive Officer for over the last 13 years, I retired as Chief Executive Officer at the end of last month. Last December, I was pleased to announce that Jack Sanders, our President, would succeed me as CEO, which he did, the first of this month. Many of you know Jack and probably weren't surprised by this change. I'm remaining Executive Chairman of the Board and will continue to work with our board on policy issues, and when asked, I will provide opinions to Jack.

As you look at this chart, you'll notice that Sonoco doesn't change CEOs very often. In fact, Jack will be only the eighth CEO of our nearly 1,400 -- 114-year history. You'll also note by these pictures that Jack will be the first CEO since our founder, Major Coker, to support a goatee.

On a more serious note, Jack will be a great CEO. He's a terrific guy and will be a terrific CEO. He's certainly played an integral part in helping grow this company over his 25-year career and has successfully led nearly all of our businesses in the consumer, industrial and Protective Solutions business.

One of the more important roles of a CEO and the board is to develop talent that will lead the company in the future. I'm extremely proud of the team that I had the opportunity to lead during my tenure as CEO. And I'm very excited about Jack and the leadership team that will take this company forward in 2013 and beyond.

With that, I'd like to ask Jack to join me on the stage and let him address Sonoco's 2012 performance, the state of our company and our strategy going forward. Jack?

M. Jack Sanders

Good morning. And thank you, Harris, for that kind introduction. I would also like to point out, my goatee is the same color as the major's as well.

Let me say how honored I am to become the CEO of such a great company. I also want to extend my sincerest thanks to you, Harris, for your leadership, guidance and friendship. I am pleased that you will remain an integral part of our company, one you helped to build. You placed us on a solid foundation and created an exceptional platform for our continued growth and success. Again, Harris, thank you for all that you've done.

Now let me talk about the state of the business, but before I can, I need to let you know and remind you that our -- that today's presentation contains a number of forward-looking statements based on current estimates, expectations and projections. These statements are not guarantees of future success and are subject to certain risks and uncertainties. Therefore, the actual results may differ materially. Information about factors that could cause different results and information about the company's use of non-GAAP financial measures is available in our annual report and our -- and on our website at

2012 was an important year in Sonoco's continuing transformation into a global solutions provider of industrial, consumer and protective packaging. We successfully integrated the largest acquisition in our history, following the purchase of Tegrant, which made Sonoco the leading provider of custom engineered protective packaging in North America. The acquisition helped us achieve record sales in 2012, along with record gross profits, while base earnings before interest and taxes grew 2.4%. In addition, free cash flow grew from a negative $32 million in 2011 to a little over $100 million in 2012.

But frankly, our performance was not what we expected. We did not fully anticipate the negative impact rising commodity costs would have on packaged food sales, or the extent to which the European recession would reduce demand for industrial products. In addition, several temporary operating issues served to increase our cost and to constrain productivity improvements. As a result, base earnings in 2012 declined 3.5% to $2.21 per diluted share, which is still the fifth highest in the company history.

Despite some macroeconomic forces beyond our control, I am pleased to report that the state of Sonoco remains strong and is improving. Sonoco has one of the strongest balance sheets and one of the best credit ratings in our industry.

Cash generated from operations in 2012 was nearly $404 million compared with $245 million in 2011.

We invested $183 million in capital expenditures to improve our company and paid our shareholders $120 million in cash dividends. The remaining free cash was used to reduce debt. In addition, in December, we repatriated $260 million of offshore cash that we used to pay off some of the debt associated with the Tegrant acquisition. Our net debt-to-total capital ratio was reduced to about 40% at year end compared to nearly 48% in 2011. And we expect to further reduce debt in 2013 and pull that ratio closer to 35%. This would meet the debt reduction goals we made after completing the Tegrant acquisition, and would do so almost 1 full year ahead of schedule.

Standard & Poor's ranked Sonoco as having one of the best debt ratings in the packaging industry, with an investment-grade rating of BBB+. We view maintaining strong investment-grade credit as an advantage over some of our competitors, as our customers have never questioned our ability to grow as they grow.

It is our expectation that the global economic outlook will remain challenging for the next several years. Given this backdrop, when we went through the strategic planning process, it was clear we needed to adjust our path forward, given our market realities. As a result, we created this new one-page plan. We've tried hard to link it to the past, but also consider the changing market conditions we will face moving forward. This is not a 180-degree change in direction, but more a 30-degree correction of course. Our new mission is to become the acknowledged leader in high-quality, innovative, value-creating solutions that satisfy the customer.

We use several key words such as innovative, meaning we will leverage technology to create customer-focused solutions, but it can also mean we will leverage our footprint to lower our cost to produce or leverage our portfolio to create true value for our customers.

Value-creating, meaning we will be the best cost producer giving the customer benefit desired.

And solutions, meaning a multi-product and service offering that delivers the most complete value equation.

Together, these will allow us to deliver on the promise to satisfy the customer.

This logo takes our strategic focus areas of safety, grow and optimize, operational excellence, maximizing cash flow and talented people, and surrounds them with our #1 priority: satisfy the customer.

What I like about our new mission is that it is customer focused, it is customer driven, and ultimately, it will be customer judged.

To help us achieve our objectives in 2013 and beyond, we created a roadmap that focuses on 3 strategic imperatives. Our first imperative is to maximize sustainable cash flow. Our strong cash flow allows us to invest to grow, pay dividends or even buy back shares to create value for our shareholders. All of our businesses are expected to improve free cash flow. However, how each of them achieves this will vary.

Cash flow has 4 basic levers: operating earnings, depreciation, capital expenditures and working capital. For businesses in growing markets, the best, most expedient way to improve cash is to grow the top line with profitable new sales. For more mature, slower-growth businesses, managing working capital and strong productivity are the most impactful levers to manage margin and cash flow.

So we are segregating our businesses into 2 operating categories or areas of focus, grow or optimize, so they could be managed and rewarded for their efforts.

Our second imperative is to focus resources and investment in our businesses serving faster-growing markets. This includes certain Consumer Packaging, Protective Solutions and selected emerging market operations. Our identified growth businesses must be able to generate at least 4% unit growth year-over-year, every year, and 4% is in the current environment. If we see stronger economic conditions, we would expect a higher rate of growth.

Finally, we must optimize our portfolio of businesses, and we expect to invest disproportionately in areas where we see the most strategic opportunities. Optimizing the portfolio also means we must improve the performance of several of our businesses and make positive strides over the next couple of years to improve their returns.

Our strategic objectives remain unchanged. First, maintain a strong balance sheet and an investment-grade credit rating. As I said earlier, this remains foundational to our success. Second, we must remain dedicated to providing annual double-digit total returns to our shareholders and returns on capital and equity in the top quartile of the S&P 500.

Our consumer-focused businesses are unique when compared to our packaging peers. Our true value proposition is our ability to provide multiple products and services to our customers in the form of a solution that provides them operating efficiencies and market advantages.

Our consumer business includes rigid paper enclosures, which accounts for about 40% of our consumer-related sales, and where we are the global leader in composite cans; rigid plastics, where we are focused on producing thermoformed, blow-molded, injection-molded and extruded products for our customers; flexible packaging, where we produce innovative, award-winning packaging utilized -- utilizing printed plastic film; and finally, Display and Packaging where we provide one-stop retail merchandising solutions, including point-of-purchase displays, fulfillment and fee-based supply chain management services.

For the year, consumer-related sales decreased 3% due to lower demand for food-related products. Operating profits in this segment also declined 8% due to the lower volume and a negative mix of business.

The cornerstone of our solution -- our consumer strategy has been to position ourselves as the industry's only total solutions provider for Consumer Packaging. Our unique business model goes beyond just selling a package but focuses on providing our customers with insight-driven innovation. Our model had evolved over the years to include a suite of proprietary consumer research capabilities that help drive innovative product development. We utilize our design capabilities to develop packaging, selecting from our complete line of paper, plastic and flexible technologies, then we're able to provide point-of-purchase displays as well as retail fulfillment and supply chain solutions.

We are the world's largest producer of composite cans, with operations in 11 countries. We believe there are still opportunities to expand the can into new markets and new platforms, such as ice cream, automotive, pot fill applications and into new shapes that can lead to additional opportunities.

In February, we opened a new composite can plant in Johor Bahru, Malaysia, to supply the fast-growing stacked chip market in Asia. This is our second can plant in Malaysia, and later this year, we expect to add an additional can line to our plant in China to meet growing demand. We were also recently awarded new business in Eastern Europe and expect to open a new can plant in Poland in early 2014.

Flexible packaging continues to be a bright spot for us due to changes in consumer behavior and what they expect from packaging. This is also an area that demonstrates the value of obtaining a greater understanding of the consumer and how they interact with packaging in their daily lives. Our flexible packaging business had one of its best years in 2012, with growth in both sales and operating profits.

We provide our customers a total solutions approach by offering graphic design, cylinder engraving, high-impact rotogravure printing and unique features like our patented precision die-cutting technology. This technology was used when we collaborated with Pepperidge Farm to create a resealable package for its popular Baked Naturals, of which you will receive a sample today. The design of this package was driven by insights we obtained from consumers, who said they were looking for a reclosable flexible package. This new package features Sonoco's SealTab technology, which is integrated into the bags wall.

We also used our precision die-cutting technology to develop a new twist to open package for Halls drops. The -- this package received a Flexible Packaging Achievement Award in 2012, and you will receive a sample of this product today as well.

Finally, we worked with Honest Kids brands to develop a high-performance juice pouch, which features award-winning graphics.

To meet growing customer demand, we made a significant investment to add a new rotogravure press to our Moorestown, Tennessee, facility. And the new press is being installed and should be operational in the fourth quarter.

In the third quarter of 2012, we opened a $15 million plastics plant located on the Beauty Park Campus in New Albany, Ohio. This new plant is operating 20 blow-molding lines, producing PET bottles for personal care products for the Limited brand. Also shown here is a new multilayer thermoforming line in our Waynesville, North Carolina plant which is capable of producing a wide variety of containers for shelf-stable foods.

Our newly named Display and Packaging segment operates 20 packaging facilities in the United States, Poland, Mexico and Brazil. This business has 2 distinct operations: packaging fulfillment, as illustrated by our razor-and-blade pack center in Irapuato, Mexico; and merchandising solutions, represented by these award-winning designs.

I am pleased to announce today that our Display and Packaging business has been awarded a major contract for Energizer brands. This turnkey service includes design, sourcing of materials, packaging of batteries and deployment of finished goods to distribution centers, or directly to customers on behalf of Energizer. The scope of this service is significant and includes 30 million primary packs covering 150 SKUs.

In addition to the primary packaging, we will also be designing, manufacturing and fulfilling thousands of retail displays. We are in the process of transferring packaging lines from Energizer's plant in North -- to our North Carolina facility and expect to ramp up operations this quarter.

Sonoco is the world's largest producer of tubes and cores, with 220 plants operating on 5 continents. Our 20 uncoated recycled paperboard mills provide the primary raw material for our industrial converted products businesses. Sales declined in this segment by about 3% in 2012, mostly which was due to lower raw material costs, primarily for old corrugated containers or OCC. Operating profits increased 2% during the year due to a positive price-cost relationship in tubes and cores and improved performance in our wire and cable reels business.

While global tube and core volumes declined, North American volumes began strengthening in the second half of 2012. Some of the improvement is attributable to the rebound in the home construction and automotive markets. From nylon yarns used to make airbags to industrial polyester yarns used in tire cord to textured polyester yarns used to make car seats, our tubes and cores are a critical part of the automotive supply chain.

Sonoco is also a leading provider of cores for plastic film producers. They rely upon the smooth surface property of our cores to minimize surface markings. One of our film customers is a leading manufacturer of lithium battery separators used in notebook computers, mobile phones and a variety of consumer electronics.

Sonoco is one of the largest global producers of uncoated recycled paperboard, producing about 1.8 million tons annually. About 60% of our paperboard is used internally and converted into tubes and cores, composite cans and protective packaging. Our largest trade sales market is the North American tissue and towel industry, where we experienced 5% growth in 2012.

We remain on schedule to start up a new biomass boiler system in our Hartsville manufacturing complex in November this year. The project is currently 80% complete, and we will begin testing late this summer. This new $75 million project will provide reliable steam and power to our largest manufacturing complex, and will lead to improved productivity and reduced energy costs.

Our recycling facilities not only provide feedstock for our papermaking operations, but they provide valuable recycling services to many of our consumer customers as well. Fruit of the Loom's distribution center located in Summerville, South Carolina, received gold-tier sustainability status in 2012 by working with Sonoco recycling to take their operations to landfill-free status. Let me also add that 7 of Sonoco's North American plants reached landfill-free status in 2012 and another 17 have been able to divert at least 95% of their waste from landfills.

Finally, our European unit is working with the Alliance for Beverage Cartons and the Environment, or ACE, to establish the first-ever drink carton reprocessing facility near Halifax, England. When in operation, we will process about 25,000 tons of drink cartons and convert them into recycled paperboard.

Our Protective Solutions business shows real promise. Following the acquisition of Tegrant, sales in our new Protective Solutions segment rose 250% to $555 million, while operating profits increased more than 150% to $39 million. Operations within the acquired Tegrant businesses performed very well in 2012, and we met our expectations for growth and margin improvement. This segment's products include custom engineered molded foam products, temperature-assurance containers and retail security packaging.

Our molded foam business is divided into consumer- and industrial-served markets. We experienced double-digit sales growth in our industrial businesses in 2012.

We added new presses to our Findlay, Ohio plant, and sales grew 50% to nearly $40 million. A large part of this increase is due to new business from companies like Honda, where headrests and other components are molded. The business is growing as automakers rush to reduce weight in vehicles to meet federally mandated fuel efficiency standards.

To meet increasing demand for molded polypropylene foam components, Sonoco will open 2 plants during 2013. On March 15, we held a groundbreaking ceremony for our new state-of-the-art facility in Celaya, Mexico. And a second plant will soon be announced in the Central United States, to serve the fast-growing automotive market in that region. Both will have the latest technology in foam molding and will be operational by year's end.

Our ThermoSafe business also experienced double-digit growth in 2012, serving the growing needs of the pharmaceutical and life science industries. ThermoSafe continues to launch new products, including a new family of insulated pallet shippers that are being used in the United States and Europe to handle bulk distribution of pharmaceuticals and other biotech products. In addition, ThermoSafe has launched a new off-the-shelf line of a sophisticated temperature-assurance package called Certis Silver. This package uses proprietary formulations of phase change materials to allow for strict temperature control in a less-expensive package.

In addition to building businesses, Sonoco continues to gain recognition for best business practices and corporate responsibility. For instance, Sonoco was ranked for the second consecutive year as the top global packaging company for sustainability and corporate responsibility on the Dow Jones Sustainability World Index. Sonoco was also judged to be 1 of only 5 packaging companies listed in Fortune's World's Most Admired Corporations in 2013.

Sonoco is committed to delivering on the promise to its employees and to communities in which we operate. Our commitment to employee safety is one of our top areas of focus. The reportable injury rate over the past 13 years has declined significantly. Employees injured on the job declined in 2012, and 269 of our 347 operations worked injury-free.

Also this year, we partnered with the Boy Scouts of America to establish a Scoutreach program in 4 Hartsville-area elementary schools. This program focuses on teaching life skills to young boys, including developing strong values, accepting responsibility, building character and becoming better citizens.

And Sonoco's efforts to improve education here in Hartsville continues to gain momentum. We have committed $1 million annually to Hartsville public schools and have partnered with Coker College, the Governor's School for Science and Mathematics and Yale University to improve academic performance and build accelerated learning opportunities in the high schools for advanced math, science, language and the arts.

Let me conclude with some final thoughts. 2012 was an important year of transition for Sonoco following the purchase of Tegrant, the largest in our company's history. We successfully integrated this business and are investing to position it to be a new growth platform. 2012 sales and gross profit reached a record and free cash flow improved significantly. But as I've said, 2012 was somewhat disappointing, as earnings declined due to significant economic headwinds. While I believe Sonoco is well positioned for the future, we must drive our organic growth in our faster-growing businesses and optimize operations in our more-mature businesses.

I am pleased to announce that your Board of Directors has approved a 3.3% increase in dividends paid to shareholders. Effective today, Sonoco will pay $0.31 per share to shareholders of record as of May 17, payable on June 10. This is the 31st consecutive year that Sonoco has increased dividends to shareholders, and we have paid dividends for 352 consecutive quarters, dating back 88 years.

Sonoco provides its shareholders with the highest cash payout of any company in the packaging sector. Annualized at $1.24 per share, our cash dividends provide a 3.5% yield to our current stock price and a 50% premium to the S&P 500.

In conclusion, let me state that our management team and our 20,000 associates around the world are focused on delivering on the promise to all of our shareholders, by truly understanding what our customers need and developing a solution at a cost that represents value to them, by organizing to ensure we're capable of doing so and by focusing on the key cash-generation levers for each type of business: grow or optimize.

Our 114-year history of success is not a promise of future performance. Our success must be earned every day. It is my belief that what got us here will not keep us here. We must adapt if we expect to prosper. We must become more innovative, more creative, and adapt to the changing world around us.

Thank you for coming today. And I'll be glad to take any questions.

If there are none, Harris, let me ask you to return to the stage to adjourn the meeting. But as he does so, I want to point out that a new tradition at Sonoco started at the company's 100th anniversary, and that is to have a plaque with a quote from the outgoing CEO placed on the "People build businesses" statue in front of our corporate headquarters. Harris, I know you're not interested in doing any of this, but given what you've done for this company, that simply would not be right. We combed through your many speeches over 13 years and believe we found a quote of which even you would approve. For those of you who know Harris, you know he has a deep concern for improving education in our community and in the state. Thus, the quote from Harris we found and which we placed on the plaque reads, "We believe it's our responsibility to build the community as we build our business. Our desire is to help schools impact the academic excellence of our students as they become the workforce of the future. It is absolutely critical to the success of this country and our company that every child, regardless of economic status, leaves the public school systems with the skills needed to succeed in the workplace."

Harris, thank you for all you've done for Sonoco and all that you've done for this community we call home.

Harris E. DeLoach

Well, thank you very much. Jack, thank you very much for those kind words. And thank all of you for your appreciation as well.

If there is nothing further, the meeting is adjourned. Travel safely, and thank you so much for your interest in Sonoco and all the support that you, in fact, give us. Thank you very much.

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