Sonoco Products Co (SON) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Second Quarter 2023 Sonoco Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and thanks to everyone for joining us today for Sonoco's Second Quarter '23 Earnings Call. Joining me this morning are Howard Coker, President and CEO; Rob Dillard, Chief Financial Officer; and Rodger Fuller, Chief Operating Officer.

Last evening, we issued a news release highlighting our financial performance for the second quarter and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at sonoco.com.

As a reminder, during today's call, we will discuss 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 differ materially. Please take a moment to review the forward-looking statements on Page 2 of the presentation.

Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions as well as reconciliations to GAAP measures is available under the Investor Relations section of our website.

For today's call, Howard will begin by covering a summary of second quarter '23 performance. Rob will then review our detailed financial results for the quarter, and along with Rodger Fuller, will discuss our guidance update for the full year 2023. Howard will then provide closing comments followed by a Q&A session.

If you will turn to Slide 4 in our presentation. I will now turn the call over to our CEO, Howard Coker.

Thank you, Lisa, and good morning to everyone. I just want to start by acknowledging the strong performance and cash flows, subsequently against the backdrop of a highly volatile environment. Rob will take you through the details. But what I'll tell you is that market conditions were pretty turbulent in the quarter, with the more down shift in demand as the quarter progressed. Translating into lower volumes across virtually every area of our business on a global basis.

For the second quarter, net sales were $1.7 billion, EBITDA was $275 million and adjusted earnings per share were $1.38. Most of our businesses were at or above expectations for the quarter due to commercial and operational excellence and productivity improvements. And other businesses that were most affected by lower volumes were consumer model and global industrials, which were impacted by inventory management and destocking programs with our customers.

To give you my perspective, overall, customers in Metal and Industrials are buying less, both related to staples and discretionary items. Our customers are searching for price point elasticity which creates demand and inventory management challenges throughout the supply chain. Our customers are faced now with real macro-driven changes in consumer buying habits around working capital management priorities and promotional timing, which makes visibility harder in the near term.

The downstream impact is reflected in our Industrials business, where we provide products serving the broader manufacturing sector and packaging used in household staples, discretionary goods and construction. Buying is slowing down and lower volumes are also slow. However, even though the -- through these turbulent times, we were able to deliver 16% of adjusted EBITDA in the quarter. Our hard work over the past few years on the portfolio, structural simplification, operational improvements and commercial excellence have enabled more stable profitability than in prior economic slowdowns in our history.

While we're not satisfied with these results, our excellent cash flow and EBITDA margins reinforce the durability of our underlying profitability and integrity of our strategy.

And with that, I'll turn the call over to Rob for more details on the quarter and our '23 outlook. Rob?

Thanks, Howard. I'll begin on Slide 6 with a review of key financial results for the second quarter. Please note that all results discussed will be adjusted and all growth metrics will be on a year-over-year basis, unless otherwise stated. The GAAP to non-GAAP EPS reconciliation can be found in the appendix of this presentation as well as in the press release.

As Howard said, the second quarter financial results reflect Sonoco's ability to deliver strong results despite a low-volume environment. We continue to achieve strong results in most businesses in the portfolio, including meaningful improvement in rigid paper containers and all other and record results in flexibles. A few businesses were below expectations and meaningfully impacted the consolidated results, mainly Metal Packaging and Consumer and Industrial North America.

Consolidated sales decreased to $1.7 billion. This sales decrease was primarily driven by lower volumes due to inflationary pricing and destocking at our customers and retail as well as index-based price decreases in Metal Packaging and Industrial. Adjusted operating profit decreased to $211 million and adjusted EBITDA decreased to $275 million. Importantly, we maintained an above 16% adjusted EBITDA margin through continued focus on commercial and operational excellence as well as long-term cost controls associated with our business transformation program.

Adjusted earnings per share decreased to $1.38. Nonoperating factors impacted EPS negative $0.07 due to higher interest rates on floating rate debt. The sales bridge on Slide 7 provides the primary drivers for revenue growth in the quarter.

Volume mix was negative $190 million or negative 9.9%, this volume decrease was anticipated and was in the low to mid-single digits in most businesses. We continue to have active dialogue with customers and have been able to mitigate low volumes with operational and cost actions in most businesses. Two notable exceptions to this were disrupted demand in a handful of customers in Metal Packaging and lower-than-anticipated demand in Industrial North America.

The fixed cost structures of these businesses make them more sensitive to volume uncertainty and this had a meaningful impact on the consolidated results. Acquisitions, divestitures also had a minor negative impact on sales and were accounted for in volume on the bridge. Excluding acquisitions and divestitures, volume mix was negative 9.7%.

Price was negative $15 million. Our pricing performance continues to reflect strategic pricing efforts associated with our commercial excellence strategy, mainly selling to value and managing contracts to recover inflation. Most businesses achieved marginally positive price performance in the quarter. This was offset by meaningful index-based price decreases in metal packaging and consumer and the paper businesses globally and Industrial.

The adjusted operating profit bridge illustrates the year-over-year change in greater detail. Volume mix was negative $65 million as operations were impacted by the previously discussed impact of inflationary pricing and destocking at our customers and retail. Price cost was positive $12 million in the quarter as strategic pricing and purchasing also had the predicted impact of $27 million of metal price overlap. Other included higher depreciation and positive FX, and improved operating profit of $4 million in the quarter.

Slide 8 has an overview of our segment performance for the quarter. Consumer sales decreased to $924 million. Flexible sales grew mid-single digits and rigid paper container sales grew low single digits due to strong price and generally resilient volume mix. Sales in metal packaging decreased due to template-based price pass-throughs and inventory management driven volume decreases at a handful of customers in both food and aerosol.

Consumer operating profit decreased to $95 million due primarily to lower volume and negative price cost. Flexibles had record operating profit and Rigid Paper Containers grew operating profit more than 15%. Consumer operating profit margin decreased to 10.3%. Consumer cost -- price/cost was negative $20 million as strong price cost in Rigid Paper Containers and Flexibles was offset by the impact of metal price overlap.

Excluding Metal Packaging, the Consumer segment would have grown operating profit over 30% and operating profit margins would have been 15%. Metal packaging is performing well in the disrupted demand environment and has improved results from the (inaudible) purchased the business when adjusted for metal price overlap. We're ahead of plan on our synergy projects, and we believe we've improved the competitive position of the business as we continue to invest in high-return projects.

Turning to Industrial. Industrial sales decreased to $585 million. Industrial volumes decreased 15% due to lower demand in all key markets and geographies. This decrease was most acute in North America and Europe, so all regions were impacted. Operating profit decreased to $87 million as positive price/cost was offset by lower volumes and negative productivity from deleveraging. Notably, this was only $7 million less than the record results in the first quarter of 2023.

The Industrial segment achieved positive price cost of $21 million as commercial excellence activities continue to align price with the value of products created. Operating profit margin increased to 14.9%, a meaningful improvement from previous cyclical lows. All other sales were flat at $197 million, and operating profit increased 73% to $29 million.

Moving to Slide 9. Our capital allocation framework is aligned with our business strategy to drive value creation for our shareholders. Our priority is to allocate capital to high-return investments in our core businesses to drive growth and improve efficiency. We remain focused on increasing the dividend, which at present is $0.51 per share on a quarterly basis or greater than 3% average yield over the past 12 months. After capital investments in the dividend, we prioritize investments in accretive M&A aligned with our long-term strategy, balanced against our strategic priority of maintaining strong liquidity and accidental capital.

We ended the second quarter with over $1 billion in total liquidity. In the second quarter, we generated $251 million of operating cash flow and invested $78 million in capital expenditures.

On Slide 10, we have our guidance update. Our Q3 EPS guidance is $1.25 to $1.35. We're revising our full year 2023 EPS guidance of $5.10 to $5.40. We're also revising our full year 2023 adjusted EBITDA guidance to $1.02 billion to $1.07 billion. We are affirming our full year 2023 operating cash flow guidance to $925 million to $975 million. We anticipate closing the RTS and WestRock paper mill acquisition this year, and this is not in our forecast.

Now Rodger will discuss the 2023 outlook.

Thanks, Rob. So please turn to Slide 11 for review of segment performance drivers for the third quarter of 2023. First, with the Consumer segment for the third quarter, we expect continued strong performance in our global rigid paper containers from both existing and new products as sustainability-driven initiatives are driving a pipeline of new growth opportunities.

And on a positive note, select European customers are launching our all paper products in European markets this summer using Sonoco's unique and proprietary technology. In fact, we're expanding capacity for rigid paper containers in Brazil, Malaysia and Poland to take advantage of globalization of products that use our technology. We also expect continued strong performance in our flexible packaging business. The team is doing just a phenomenal job of expanding this business with new and existing customers and the productivity numbers are very impressive. These drivers will sustain flexible's performance into the next quarter.

We anticipate metal volumes improving sequentially in the third quarter as we enter pack season. Both food and aerosol can volumes are below our original expectations for the second half due to inventory destocking that Howard and Rob have already referenced. Even with lower volumes, metal profitability will improve from higher sequential volumes and the reduced impact of metal price overlap. Lastly, we expect seasonally soft volumes in our rigid plastic foods business, where volume was also a challenge in the second quarter.

Turning to the Industrial segment. We expect volumes to decline sequentially from the second quarter and remained soft globally through the second half of the year in both our paper and converted products. All geographies are suffering from persistent demand weakness across our core industrial markets for paper, film cores and textiles. Our customers are citing lower end market demand and customer destocking as factors for these to these declines. Protective packaging for consumer white goods was up 5% versus a relatively soft demand in 2022. We're also expanding this paper-based protective packaging into the European market.

With lower volumes, productivity improvements remain challenging from deleveraging. We continue to aggressively manage variable expenses as the countermeasure to minimize the impacts from the lower volumes. In our all other businesses, we continue to have net stable demand across this collection of business with some positive seasonal impacts and note for vaccine shippers in our ThermoSafe products business. We're managing price costs as resin prices remained stable to declining, so minimal impacts to all other businesses from resin in the third quarter.

And finally, as we discussed before, we continue to invest in high return capital in our all other business for productivity and run these businesses as efficiently as we can. We expect to also see the benefits of these improvements into the next quarter and beyond. So overall, in the Consumer segment in the third quarter, we have seasonal sales improvement and the -- all Other segment is expected to continue to perform well.

In our Industrial segment, we're suffering through a really challenging demand environment. Thanks to our team for their diligence in managing these tough times as we will see greater benefits in industrial when volumes return as evidenced by our margin performance in Industrial in Q2.

And with that, Howard, I'll get back to you.

Thanks for that update. I think, Rob and Rodger have covered the results and outlook well. Before we open up the question, I just want to provide an update on elements of Sonoco that are core to our enterprise strategy, and you can find them on Slide 12. First, I continue to receive questions on where we are relative to reshaping the portfolio. I'll just tell you -- it is active. We are managing a funnel of accretive acquisitions and plans for non-core divestitures over the next few years. As you know, the deal environment is not great right now and any future selling or buying of assets or businesses will be based on timing for the best value for our shareholders.

On the operating model side, I think our EBITDA results prove we are operating well in choppy waters right now. We have the plans, capabilities and discipline to operate in this market, and we have durable processes to manage and align costs to opportunities and challenges. Given our expectations for market demand, we have amplified our ongoing discipline and expense management.

As Rob highlighted, we're continuing to generate solid cash in the business, and our investment-grade balance sheet is strong. We raised our dividend last quarter, and we will remain focused on the best ways to generate returns for our shareholders. And finally, our commitment to ESG and sustainability initiatives are unwavering and remain wholly aligned to the core values of the company.

I'll just close with this. The hallmark of Sonoco is to serve our customers whenever, wherever and however they need us to be and they know we will be there to help them navigate the future as we have through COVID and a number of other challenges. Actions we have taken over the past 3 or 4 years have resulted in a stronger operating model to handle times of uncertainty, and we will continue to adapt and evolve to build a better Sonoco now and in the future.

And with that, and at this time, we'll be happy to entertain any questions you may have.

(Operator Instructions) Our first question comes from the line of Ghansham Panjabi with Robert W. Baird.

There's obviously a lot going on with comparisons and the impact of COVID, but you're now around 10% EBIT margins for the Consumer segment, which basically matches segment margins from back in 2019. Just curious how -- and Rodger, is this the right baseline for margins on a go-forward basis?

On the consumer side, Ghansham?

Yes, exactly.

No. I think if you look at the impact and if you go back to what we've publicized with the metal issues that we had to absorb really year-to-date through the first 2 months of the second quarter really brought those down. So actually, we expect to be north of the 10%, well north of the 10% on a go-forward basis once we clear out some of these one-off type events.

Okay. And then on the Industrial side, I mean, I think you mentioned 15% decline in volumes in the segment. Obviously, end markets are weaker, and that's playing a major role in that. I'm just trying to reconcile that versus the operating margins you're delivering in that segment, which are quite a bit higher relative to your historical baseline and just your thoughts as it relates to the sustainability of that margin threshold.

Yes, Ghansham, not to go back too far, but I'll talk about the last 3 or 4 years, but really in the last 5 or 6 years, we have really put a lot of capital towards improving the performance of our Industrial business on a global basis, and I won't talk through all of the projects that -- and opportunities that we've pursued over these periods of time.

But the one I will is Project Horizon. What I'll say about Horizon is you can say, look, on the surface with volumes where they are, we have not been able to take advantage of the productivity associated with that investment. But on the other hand, it also took us out of the corrugated medium market where we are nonintegrated and a very small machine and scope of the rest of the industry, which you think about previous times where we saw similar type slowdowns, be it in COVID or even all the way back to the '08, '09 time period. We self-helped ourselves by 15% of our North American paper volume is no longer tied to a market that -- we have absolutely really at the time had absolutely no outlook for that capacity.

So I was using that only as a reference to the number of projects that we've undertaken to improve the overall durability of our industrial business.

Our next question comes from the line of Gabe Hajde with Wells Fargo.

Yes. One was something we kind of picked up in the trade publications here in the past week or so, talking about URB imports into the U.S. I don't really recall this something as a topic we've read about maybe on the last 10 years or something like that. So just curious, Howard, do you view this more of a function of kind of local demand patterns that producers are maybe experiencing in their local markets and then perhaps something maybe that you expect to persist for whatever reason. And just curious if you're moving anything around your own system just based maybe on an ability or cost of OCC.

Gabe, this is Rodger. Imports of URB into the U.S. is really nothing new. I know it was picked up in the publication, but there have been imports coming in for many years. It did stop during COVID because of the high cost of logistics and transportation. And it picks back up now as the cost of containers have returned to a more reasonable level. So that's new.

And as far as our system, we represented in every region. So we really don't move forward from region to region simply because we don't need to do that but when volumes are soft, like they are now, seating board come in from -- on the East Coast from places like Italy or on the West Coast from Asia is not unusual, and we've dealt with that for many years.

Okay. And then I guess maybe a question going into '24. I mean to the extent that we see some of these kind of choppy order patterns or maybe softer than what we'd expect demand can you talk about just, I guess, your ability, I mean, to variabilize the cost structure? Or I mean you guys have been fairly active to drive margins higher here of late on the commercial side. Maybe how demand dependent, from your productivity is, that you talk about getting on an annual basis and if there's anything kind of outside of pattern that you could do as things are soft right now?

Yes. We obviously are taking the necessary rightsizing actions to match the current demand profile. And that's across operations and certainly on the fixed side as well. As we look -- the encouraging -- encouragement I have about what's going on right now, we've said all along -- what I'll say, all along the last several periods that we are in a better position today to handle uncertain times as we're in right now. It just makes me feel very positive as we we'll see -- hopefully see demand start to pick back up. And the ability to leverage that beyond the margin profiles that we're looking at right now, I guess pulse for a really positive viewpoint as volumes do recover.

Our next question comes from the line of Mark Weintraub with Seaport Research Partners.

First, can you just kind of update us in your guidance, how much is the metal price overlap? Is it still kind of in the $40 million region? Or has that changed?

Yes. Mark, this is Rob. For the quarter, metal price overlap was negative $27 million. And so that includes what we incurred this year plus the year-over-year impact. And in Q1, as you remember, that was $86 million. That's largely completed, if not totally completed for the year at this point. So the full year metal price overlap will be $130 million.

Okay. And so you cut your guidance on EBITDA by $80 million. So could you kind of walk through what the biggest components of that reduction would have reflected?

Yes. So it was a 5% to 15% decrease in the EBITDA guide if you think about that by segment, Consumer is going to be down. We're expecting between 15% and 20%, largely driven by the metal price overlap, which we just discussed and then also some relatively negative or meaningfully negative performance in plastic foods, which was -- has been down due to the perimeter store business, which we're working through right now.

Industrial is going to be relatively flat actually year-over-year with some positive price cost and volume mix kind of offsetting each other. Other will be up 40% to 50% and so that should bridge you to the total impact for the year.

Okay. And just to clarify, in terms of what the delta versus your prior expectations, where was that concentrated? And...

It's really an industrial. I think that when we originally set up the view for the year, we thought that the Industrial would only really have these negatively low volume environment for the first half and that we see some moderation in the second half. And what we're seeing really with our customers is people have -- they haven't seen it this low for this long, we are at kind of 2009 kind of levels in terms of volumes from an industry perspective and a utilization perspective, and so there has been this expectation that it has to recover sooner than later. And our current view is that it won't recover in 2023.

Right. And it really is striking because it had fallen quite a bit even in the second half of last year. And I mean, are you getting a better sense as to how much of this may have been a function of the volumes having been inflated during the pandemic versus destock or sort of where the trend line would be?

No, we don't think that there were inflated volumes at all during COVID. Actually, there was a modest slip down. We think that this is really just complete destocking of that industry and some disruption associated with inventories.

Okay. Super. And just one last quick one, if I could. Just on RTS, any update, you did say you anticipated it to close by the end of this year. I believe there's the second request. Any color you can give us in terms of how that's progressing?

Yes, Mark, it's Howard. We expect to close late third quarter, early first quarter.

Our next question comes from the line of Anthony Pettinari with Citi.

This is Greg on for Anthony. My first question is on the pack season. So you've heard comments from others around maybe some inclement weather, kind of a lackluster harvest season impacting this year. So I'm wondering from your perspective, how would you characterize this year's ag harvest and pack season relative to prior years and then relative to your expectations heading in? And acknowledging the harvest is solely out of your control. Is it possible to quantify the impact of weather or adverse harvest on food can volumes in the second quarter? And to what degree a poor harvest is factored into your full year guidance?

Yes. I would say if you really got deeper into our metal volumes were pretty similar to what CMI data, the public data represented. But when you really dig into it it's down to a couple of discrete customers on the food can side and on the aerosol side as well. And if you take those out, you were actually flat to up. So -- and what we're seeing from a pack safety perspective, what we're seeing from one in particular is that things are starting to pick up now and expect that they should start normalizing as we enter into the third quarter.

Others -- the other couple related to conscious choices of price over volume, but also we're seeing that the volume is starting to return there as well. Similarly, non-pack related, but on the aerosol side, same as we enter the third quarter, July does not make a quarter, but we are seeing remarkable improvements in the couple of aerosol accounts that brought us down.

So broadly speaking, and Rob talked to this, we're extremely pleased with the performance of the business, the integration, the synergies obtained and frankly, the market reception that we've received. So we view this as this second core phenomena has not been one of any concern at all. And we feel like we are starting to see in July than our customers are telling us that we are making a positive turn at this point in time. So I hope that helps, Greg.

Thank you, Mr. Coker. Yes, that's very helpful. I appreciate the color. And just my second question and last question is around price, I guess, across the entire Sonoco portfolio. So we've seen weaker volumes now for a few quarters, destocking. I'm wondering historically, how and when those volume weakness translate into customer pushback on pricing? And then if you could segue that into what you're seeing in today's marketplace, that would be really helpful.

Yes, I'm going to talk about the Industrial side to start with, which is a bit of a head scratcher for us. We've always looked at -- if you think about what our industrial business, we supply the beginning of really industrial and consumable supply chains. And historically, what we would have seen is that as the Industrial businesses slowed, we see an adverse or the opposite happening on the consumer side that's starting to pick up. And this is kind of unique situation that we're in right now.

Our industrial -- if you're looking at the data and data alone, you would say that the global economies are in pretty big trouble. But that is not what we're hearing, but it's certainly what we're feeling. So question mark from our perspective is what is going on here for textile, films major markets to be down on a global basis as they are understandably in Europe where they think acknowledged in a recession, we understand it. But we're not -- we have not thus far seen the pick up on the consumer side. And I think that relates to your question, Greg, is how many customers, and we are seeing customers saying, "Hey, look, we're taking price over volume at this point in time, but we're starting to see cracks in that, that we are seeing more promotion activity". Our customers are telling us that we should see some improvements going forward on the consumer side. The industrial side is the real head scratcher right now. But I will say, again, that the position that we put ourselves in times like this allows us to perform extremely well, even though the volumes aren't where we would like them to be.

Yes, this is Rodger. I would just add, we have built in some margin compression in Industrial into the third and fourth quarters, primarily due to higher costs. OCC on average up, let's call it, $8 to $10 a ton well deserved wage increases for our team. So not so much from price but some continued inflation in the system. So again, we did built in some margin compression as we get to the second half of the year.

Our next question comes from the line of Cleve Rueckert with UBS.

I just have one follow-up on the guidance and really a couple of questions there. But firstly, how did market conditions develop in the second quarter? I mean, it sounds like maybe the plan had some improvement in Industrial in the second half built in that didn't materialize. I'm just curious to understand, like did market conditions weakened in the second quarter? Or was it just the lack of orders that didn't come through, and now you sort of lost some visibility into the second half?

Yes. This is Rodger. In Industrial, yes, we were -- as we exited the first quarter, we expected some improvement in volumes in Industrial in the second half of the year. What we're hearing from our customers now, we just believe that's simply not going to happen. So as you look at sequentially, the third quarter is going to be down 4% versus our second quarter volumes. So that's pretty weak and then continued weakness into the fourth quarter. So frankly, again, we were expecting some of the inventory had worked itself out of the system, and we'd see some pickup now in our guidance, we're not seeing that in the second half of the year. I think that was the biggest volume change from our previous guidance to where we are today.

Okay. So it's sort of a lack of improvement not necessarily a weakening of market conditions.

Correct. Correct. While seasonally, Europe is always slower in the third quarter. So again, total Industrial is seasonally down about 4% versus the second quarter.

Yes. And then so just in the Industrial business, what are your lead times there in that business? And I'm just kind of curious like how quickly do you think market conditions could turn around and improve? Is there -- like it looks like in the guidance, if I just take the midpoint, Q4 is kind of the low point on EPS, it sounds like that's conservative, but I'm just wondering, is there a potential to outperform that? Or do you kind of have visibility into the end of the year now. And if you do get the orders that you're looking for, they'll be coming in 2024.

Yes, Cleve, the -- we don't normally carry large backlogs, just the nature of our business. But what I'd say is right now, we're basing our forecast on the best information that we have. One of the best gossip that I can look at is what we're hearing and across the North American economic situation right now being more on a positive trend than most people thought. Is that fully sustainable you would certainly think that the business that we're in, which is the -- really the point -- the top of the air in terms of the manufacturing, industrial and consumer products that we should be -- we should benefit from that. So we don't have that crystal ball in front of us. Our customers can only tell us what they know at this point in time. And so yes, we are continuing to drive out the current type of demand profile that we're seeing through the end of the year, could that change, not sure...

(Operator Instructions) Our next question comes from George Staphos with Bank of America.

Thanks for the details. Can you hear me okay?

Yes, George.

So happy August. I guess the first question I had, if we look at the sequential earnings downtick 3Q versus 2Q, and Rodger, I think you covered this already in some of the other questions. Is it roughly 50-50, would you say between the inflation and the volume downtick you're seeing in Industrial, would that be -- or how would you frame it for us from the 2Q number to the 3Q guide?

That's close, George. I think that's probably very close.

Okay. Now -- what's interesting is that some of the other companies that buy tubes and cores for winding their products that we cover have started to see some sequential improvement, still down year-on-year but seeing improved trends 3Q versus 2Q. And yet, what you're relaying here is industrial that's still pretty weak. So how should we reconcile that? What's -- what are we missing in terms of that interpretation and which end markets look particularly weak sequentially 3Q versus 2Q for Industrial.

Yes, right, George, it's Rodger. Textiles and film are the weakest as we look forward. We have seen some recovery in the paper side, more on the corrugated side, not so much on printing and writing. But what we're hearing primarily from textiles and film really globally, they're seeing little recovery, and I think it goes back to inventory in the system and their customers working through the inventory they have in the system. As Howard said, we hope their crystal ball is not totally correct, but we're going by what they tell us.

Okay. Good. We appreciate that color there, Rodger. Last -- next question, I should say, and then we'll have one other, and we'll turn it over. In metal, can you give us what you believe the year-on-year volume impact to EBIT or EBITDA will be versus 2022. We have the metal overlap, as you called it, over $100 million between 1Q and 2Q. What is the year-on-year impact from volume for metal and consumer EBIT for '23 versus '22?

George, it will be between $40 million and $60 million this year, and that's volume and the associated productivity with it.

Okay. And then my last question is when you sit back and you look at your volumes and that impact relative to what's coming out of CMI, what gives you comfort that you are -- and I haven't sort of mapped this so perhaps this would be exactly the same. But what gives you comfort that you are not losing share or said differently, could you give us on a year-to-date basis, what your volume was by key end market in metal this year versus last year.

Yes, I'll have that in front of me, George. Well, food down about 10%, aerosols around 14%. But again, when you dig into that, it relates to really a couple of customers in both segments of the business and there are stories behind one being more inventory carryover and the other one related to price versus volume decisions that customers are making.

Well, again, I'm repeating myself, but that was a second quarter phenomenon that we see pulling out of as we entered the third quarter, more normalized volumes. And I've taken time, so if your question about share, we have not lost any share of that I'm aware of at all. Certainly, nothing material and the market reception has been extremely positive as Sonoco has under been supposed since last year. So we look at this as just a one-off, if you will, for the quarter and that we're going to be pulling ourselves out of it, our customers are telling us, that's exactly what the case is. And we're, again, excited about the market reception that we've received thus far.

That concludes today's question-and-answer session. I'd like to turn the call back to Lisa Weeks for closing remarks.

Thank you for joining us today. If you have any follow-up questions, we'll be around after the call or we can follow up with a scheduled call later. We look forward to seeing you on the road through the late summer and fall until we share our third quarter results in early November. Thank you to everyone, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.