Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the
Symbol Lookup tool.
Alphabetize the sort order of my symbols
Investing just got easier…
Sign up now to become a NASDAQ.com member and begin receiving instant notifications when key events occur that affect the stocks you follow.Access Now
Sonoco Products Co. (SON)
October 10, 2011 10:00 am ET
Roger P. Schrum – Vice President, Investor Relations and Corporate Affairs
Harris E. DeLoach, Jr., – Chairman and Chief Executive Officer
Jack Sanders – President and Chief Operating Officer
Barry L. Saunders – Vice President and Chief Financial Officer
James Armstrong – Vertical Research Partners
Matt Wooten – Robert W. Baird
Steve Chercover – D.A. Davidson & Co.
Ian Zaffino – Oppenheimer & Co.
Phil Gresh – JPMorgan
Previous Statements by SON
» Sonoco Products CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Sonoco Products Q4 2009 Earnings Call Transcript
» Sonoco Products Q3 2009 Earnings Transcript
» Sonoco Products Company Q2 2009 Earnings Call Transcript
I would now like to turn the conference over to your host for today, Mr. Roger Schrum (Inaudible).
Roger P. Schrum
Thank you, Modesta. Good morning, everyone and welcome to our investor call. This call is being conducted on October 10, 2011. Joining me today are Harris DeLoach, Chairman and Chief Executive Officer; Jack Sanders, President and Chief Operating Officer; and Barry Saunders, Vice President and Chief Financial Officer.
A news release discussing the details of the Tegrant acquisition was issued before the market opened today. In addition, we are using a series of slides for the webcast. Both the release and the slides are available on the Investor Relations section of our website at sonoco.com.
Let me begin by stating that today’s investor call may contain a number of forward-looking statements that are based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Additional information about factors that could cause different results and information about the use by the Company of non-GAAP financial measures is available in today’s news release and on the Company’s website.
With that introduction, I’ll turn it over to Harris DeLoach.
Harris E. DeLoach, Jr.
Thank you, Roger. As you no doubt know, we are pleased to announce today that Sonoco has signed a definitive agreement to acquire Tegrant Corporation, a leading provider of highly engineered, protective, temperature-assured and retail security packaging solutions, from Metalmark Capital for $550 million in cash.
The acquisition of Tegrant is the largest in Sonoco’s long history and we are very excited that our combined businesses will create a North American leader in multimaterial Protective Packaging.
The addition of Tegrant and its family of businesses significantly advances the products, services and capabilities that we can offer both our industrial and consumer customers. As we evaluated Tegrant, we found a company with strong leadership, good growth potential, similar values and culture, and a very dedicated team of employees committed to best surveilling the needs of their customers.
Tegrant is projected to generate 2011 sales of about $440 million and when combined, Sonoco is expected to generate sales of approximately $5 billion in 2012. The transaction is projected to be accretive to Sonoco’s 2012 earnings and following the normal regulatory review, we believe the transaction will close in November of 2011.
Barry will discuss further the financial details of this transaction, but we expect to finance the acquisition through debt. As we have with past acquisitions, we will use our strong free cash flow to reduce debt over the next few years.
With that very brief overview, let me turn the call over to Jack who will give you a review of Tegrant’s operations and further explain why we are so excited about these capabilities. Jack?
Thank you, Harris. If you have heard Harris and me speak over the past several months, you know that we’ve been targeting expansion of our Protective Packaging business and hopes of finding a company that would better diversify our capabilities and product mix. Tegrant fit what we were looking for.
If you’ll turn to slide four, let me give you an overview of Tegrant and its businesses. For those of you who are not familiar with Tegrant, it’s headquartered in DeKalb, Illinois, and operates three strategic business units. Protexic brands, the largest of Tegrant’s businesses is North America’s premier manufacturer of molded expanded plastic foam for custom packaging solutions. Protexic expects to have 2011 estimated revenues of $214 million operates 15 plants primarily in North America, and has about 1,000 employees.
Included in Protexic’s 2011 revenues is the January acquisition of Createc, an EPS Protective Packaging business focused on the appliance and automotive industries. Tegrant’s ThermoSafe brands is the leader in temperature-assured Protective Packaging, serving a variety of life science and food markets. Estimated 2011 revenues for ThermoSafe are $111 million. It operates eight plants and has nearly 500 employees.
Another well recognized brand under the Tegrant umbrella is Alloyd Brands, which is the market leader in consumer retail security packaging. Alloyd is projected to have revenues of $118 million in 2011 and operates 11 facilities including research and engineering centers. Alloyd has nearly 800 employees.
Let’s take a little closer look at each of these businesses and talk more about the opportunities we see for their future development. Again, I’ll start with Protexic. They are the clear leader in engineered molded foam packaging solutions and nearly twice the size of their nearest competitor. It’s also a great fit with Sonoco’s existing paper-based Protective Packaging business and allows us to offer a total solution for our customers in terms of material, package design and testing. Protexic serves several important consumer and industrial markets with consumer electronics, automotive and industrial products representing approximately 65% of their served markets.