Sonoco Products Company (SON) Earnings Call Transcript & Summary

Good morning. On behalf of the Board of Directors of Sonoco and our management, we're welcoming you here to the '22 Annual Shareholders Meeting. I'm John Haley, Chairman of Sonoco's Board. It is great to see a good number of our shareholders back with us in person today. And in addition, we're joined by listeners around the world via sonoco.com. I'd also like to recognize those students up above from Heathwood Hall Middle School in Columbia, who joined us today to hear more about stock ownership. I hope today's meeting proves instructional for you. Let me begin today by introducing the members of our Board of Directors. I would ask that you please hold your applause until they have all been introduced. Howard Coker. Howard is Sonoco's President and Chief Executive Officer. You'll hear more from Howard on the state of the company in a few minutes. Dr. Pamela Davies. Dr. Davies is President Emerita and Professor of Strategy at Queens University of Charlotte, North Carolina. Theresa Drew. Theresa was managing partner of the Carolinas Practice of Deloitte, a global accounting and professional services firm until her retirement in 2019, she resides in Charlotte. Philippe Guillemot. Philippe was recently selected as Chairman and Chief Executive Officer of Vallourec, a world leader in premium tubular solutions for energy markets based in Meudon, France. I'm John Haley. I've had the privilege of serving as Board Chairman since 2019. And when I'm not working with this Board, I'm Chief Executive of Gosiger, Inc., a privately owned distributor of machine tools and factory automation systems based in Dayton, Ohio. Robert Hill. Robert is Executive Chairman of South State Corporation, a regional banking company with offices throughout the Southeast based in Columbia, South Carolina. Eleni Istavridis. Eleni was Executive Vice President and Head of Investment Services for Asia at Bank of New York Mellon, a global commercial banking company until her retirement. Eleni resides in McLean, Virginia. Rich Kyle. Rich is President and CEO of The Timken Company, a manufacturer of bearings, transmissions, gearboxes, motors and lubrication systems based in North Canton, Ohio. Blythe McGarvie. Blythe writes for the National Association of Corporate Directors online journal and host webinars on corporate governance topics. She previously taught accounting at Harvard Business School's MBA program. And Blythe resides in Evanston, Illinois. Our lead independent director is Jim Micali. Jim is a member and limited partner of Azalea Funds III and IV of Azalea Capital LLC, a private equity firm based in Greenville, South Carolina. Jim retired as Chairman and President of Michelin North America and he resides in Boston, Massachusetts. Sundaram Nagarajan. Naga, who is participating with us online today, is President and CEO of Nordson Corporation, a designer and manufacturer of dispensing equipment for adhesives, sealants and coatings based in Westlake, Ohio. And finally, Tom Whiddon. Tom was an Advisory Director of Berkshire Partners, a Boston-based private equity firm, and a retired Executive Vice President of Lowe's Companies, Tom resides in Belleair, Florida. I also want to recognize Marc Oken. Marc has served on our Board since 2006. And by virtue of having reached a particular age and per our bylaws, Marc will not be standing for reelection. Over the past 16 years, Marc has faithfully served our Board on numerous committees, including serving as Chair of both our audit and executive compensation committees. Marc, on behalf of the Board and our shareholders, we thank you for your outstanding service. Next, I want to recognize Lloyd Yates, who has served on our Board since 2019. Lloyd has decided not to stand a reelection due to his acceptance of the position of President and CEO of NiSource Inc., an Indiana-based utility company. I know Lloyd is listening right now. So on behalf of the entire Board, Lloyd, I want to thank you for your service to Sonoco and wish you well in your future endeavors. Thank you to our Board. I would also like to recognize several of our other retired directors who are with us today, starting with Charlie Coker. Charlie served on the Board from 1961 to 2005, including time as Chairman from 1976 to 2005. Harris DeLoach. Harris served on the Board from 1998 to 2019, including serving as Chairman from 2005 to 2013, and Executive Chairman from 2013 to 2019. Edgar Lawton. Edgar Lawton was a Board member for 32 years from 1968 to the year 2000. And finally, Jim Fort. Jim was a Board member -- a faithful Board member from 1969 to 1999. Thank you, all, gentlemen. Our current Board of Directors works very hard representing our shareholders' interest. And our retired directors continue to actively support your company. I will now call the business meeting to order and advise you that the annual report for 2021, notice of annual shareholders meeting, the proxy statement and the proxy were mailed on or about March 18, 2022 to shareholders of record as of February 23, 2022, notifying each of the annual meeting to be held today. Approximately 97.5 shares of our common stock were outstanding and entitled to vote, and each share of common stock has 1 vote. We've appointed Elizabeth Kremer of Sonoco and Mark Zimkind of Continental Stock Transfer & Trust Company as inspectors of election to tabulate the ballots. Elizabeth and Mark, will you please stand and be recognized. Thank you. Are there any shareholders here wishing to have a ballot? If so, please raise your hand and the ushers will see that you receive one. Our bylaws provide that the presence in person or by proxy of a majority of the outstanding shares entitled to vote constitutes a quorum. Before we go further, let me introduce our Corporate Secretary, John Florence, who also serves as Sonoco's General Counsel and Chief Human Resources Officer. Mr. Secretary, will you please advise that the quorum is present?

Mr. Chairman, I am advised by the inspectors of election that they have been delivered to the transfer agent prior to the meeting, proxies executed by holders of more than 90% of the outstanding shares entitled to vote. Therefore, a quorum is present.

Thank you, John. The annual meeting of Sonoco Products Company is duly convened, and we are ready to consider the matters of business. Mr. Florence has the minutes of last year's meeting and in the interest of expediency, I would entertain a motion to dispense with John's reading of the minutes so that we may move on with the rest of the business portion of the meeting. Is there a motion?

[indiscernible]

Thank you, Fred. And a second?

Mr. Chairman, I second the motion.

Thank you, Elizabeth. If anyone wishes to inspect the minutes following the meeting, John has them available. Our next item of business involves shareholder proposal -- proposals and resolutions to come before 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 4 of this year, and it must comply with the requirements of our bylaws. Today, we have 4 proposals or resolutions for consideration and an individual shareholder proposal. Starting with the first item, your Board of Directors recommends the election of the following directors for a 1-year term expiring at our next annual meeting in 2023. They include R. Howard Coker; Dr. Pamela L. Davies; Theresa J. Drew; Philippe Guillemot; John R. Haley; Robert R. Hill, Jr.; Eleni Istavridis; Richard G. Kyle; Blythe J. McGarvie; James M. Micali; Sundaram Nagarajan; and Thomas E. Whiddon. I've been advised by the secretary that there were no other nominations submitted. Do I have a motion?

Mr. Chairman, I move that [indiscernible].

Thank you, Andrea. And a second?

Mr. Chairman, I second the motion.

Thank you, [ Brittany ]. Our second item is the ratification and selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Do I have a motion?

Mr. Chairman, I move to ratify PricewaterhouseCoopers LLP [indiscernible]

Thank you, Elizabeth. And a second?

Mr. Chairman, I second the motion.

Thank you, Jennifer. The third item is a resolution requiring shareholders to provide advisory nonbinding approval of compensation of the named executive officers as described in the proxy. Do I have a motion?

Mr. Chairman, I move the [indiscernible] compensation.

Thank you, [ Dr. Harder ]. And a second?

Mr. Chairman, I second the motion.

Thank you, Bob. The fourth item is a proposal to amend the articles of incorporation to implement a majority voting standard in uncontested director elections. Do I have a motion?

Mr. Chairman, I move [indiscernible] amendment to the articles of incorporation.

Thank you, [ Kristin ]. And a second?

Mr. Chairman, I second the motion.

Thank you, Chris. The final item is an advisory nonbinding shareholder proposal entitled Special Shareholder Meeting Improvement, which is outlined in the proxy. Now your Board of Directors has carefully considered this proposal, including conducting engagements with many of our largest shareholders and for reasons explained in the proxy, we do not believe the proposal is in the best interest of the company or its shareholders. Accordingly, the Board has recommended a vote against this proposal. Do any parties wish to speak for or against the resolution? Yes?

Proposal 5, special shareholders be an improvement. Shareholders, ask our Board to take the steps necessary to amend the appropriate company government documents to give the owner of combined 10% of our outstanding common stock, the power to call a special shareholders' meeting. This includes that each shareholder should have an equal right per share to formally participate in the calling for a special shareholders' meeting. Sonoco shareholders gave 70% support to this same proposal at the 2020 annual meeting. Management then made efforts to water down what the shareholders voted for instead of 10% that was voted for it, it was upped to 15%, and then all the shares was not owned for less than 1 continuous year were excluded. It is important to adopt this proposal in the form we originally approved to help make up for our complete lack of a shareholders' right to act by written consent. Many companies provide for both shareholders' right to call a special shareholders' meeting and a shareholders' right to act by a written consent. Southwest Airlines, Target are examples of companies that do not provide for shareholders' written consent, yet provide for 10% of shares to call for a special shareholders' meeting. Although it's logical takes 50% of shares to call for a special shareholders' meeting. This translates into close to 20% of stock -- excuse me, 20% of Sonoco shares that simply voted at the annual meeting. It will be hopeless to expect that the shares that do not have the time to vote at the annual meeting will take the detailed procedural steps to call for a special shareholders' meeting and the shareholders with owned 20% of our voting stock could determine they own 40% of the voting stock when the length of the stock ownership is factored out. [indiscernible] stock ownership requirement to call a special shareholders' meeting can translate into 40% stock ownership requirement plus shareholders are still less -- excuse me, plus shareholders are still left with no right to act by written consent. Please vote yes. Special shareholders meeting approve, Proposal 5.

Thank you for that statement. Do I have a motion?

Mr. Chairman, I move [indiscernible] of the proposal.

And a second?

Mr. Chairman, I second the motion.

Thank you. I want to make you aware that Sonoco will be releasing its first quarter 2022 financial results before the market opens tomorrow, Thursday, April 21. We're all invited to listen to a webcast teleconference between management and the financial community starting at 11 a.m. Eastern on our website at sonoco.com. Mr. Secretary, please report on the preliminary tabulation by the inspectors of the voting on the resolutions presented to this meeting.

Mr. Chairman, the inspectors of election have reported that shareholders have voted to elect all nominees for director and have voted by a majority to ratify the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2022. Shareholders approved the advisory resolution on executive compensation, as well as Proposal 4 to amend the articles of incorporation. Finally, shareholders voted overwhelmingly against the advisory nonbinding shareholder proposal regarding special shareholder meeting improvements.

Thank you, John. This concludes the business portion of our annual meeting. Now I'd like to turn the meeting over to Howard Coker, President and CEO, to provide an update on the state of the company. Howard, you have the mic.

Okay. Well, thank you, John, and good morning, everyone. I'm really excited to be able to meet face-to-face with you for the first time since I took the role of CEO back in 2020. Let me say, COVID may have tested us but the company has come out better than ever. And the state of Sonoco is strong and our future is bright. Before I go further, let me remind you, today's presentation contains a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Further information about these forward-looking statements and our use of non-GAAP financial measures is available on the Investor Relations section of the company's website at sonoco.com. As I look back at all we accomplished in 2021, I am so proud of how our Sonoco team worked together to produce solid financial results despite unprecedented headwinds from storms, supply chain disruptions, inflation and the continuing effects of the pandemic. Demand recovered from many of our impacted businesses with volume mix growing 3% for the year. We aggressively drove price increases to counter higher raw material and nonmaterial inflation. And for the first time since mid-2019, we achieved price cost relationship positive in the fourth quarter of 2021. We increased capital spending to over $243 million to fund more high-return projects, including our $125 million investment in Project Horizon, which is modernizing our Hartsville uncoated recycled paperboard complex. We simplified our portfolio by exiting the Display and Packaging business. And in January, we added Ball Metalpack, a leading manufacturer of sustainable steel tinplate packaging for food and household products and the largest aerosol can producer in North America. We better focused our efforts on sustainability, including setting aggressive science-based targets to meaningfully reduce greenhouse gas emissions over the next decade. And I'm pleased that we were recently named Barron's top 100 Most Sustainable Companies list for the fourth consecutive year. We improved our diversity inclusion activities, including increasing female hiring by 44% while improving minority hiring by nearly 40%. In addition, we further strengthened our investment-grade balance sheet by reducing total debt by approximately $90 million, and we successfully annuitized our U.S. defined pension plan for the benefit of our retiree participants. And more importantly, we returned a record amount of cash to our shareholders, including $179 million in dividends and $218 million in share repurchases, utilizing proceeds from divestitures. Sonoco's purpose is better packaging, better life. This means we are committed to creating sustainable packaging solutions that help build our customers' brands, enhance the quality of their products and improve the quality of life for our stakeholders around the world. The objective of our enterprise strategy is to be the benchmark company for yield and stability in the packaging industry. Financially, our key objectives are to grow annual base EBITDA, our earnings before interest, tax and amortization depreciation to $1 billion by 2026. That is before acquisitions, and to generate average double-digit total returns to shareholders over the long term. We intend to deliver on these objectives by focusing on our capital allocation strategy on increased internal investments into our core consumer and industrial businesses. It's what we refer to as investing in ourselves. We will execute an operating strategy by implementing self-help actions that we expect to generate approximately $180 million in incremental annual EBITDA by 2026. We will continue to simplify our structure to build a more efficient and effective organization, and we will manage our portfolio around fewer, bigger and better businesses and expect to augment our core businesses by entering markets that align with our strategy and where we have a right to win. To further improve performance, our operating model is focused on 5 initiatives, which we believe create a virtuous cycle that can be leveraged to further drive our long-term value creation. At the center of this cycle is sustainability excellence, which we believe is a key driver in further creating value to our customers and our other stakeholders. The other initiatives include being exceptionally strategic with capital investments while maintaining an investment-grade balance sheet, expanding operational and commercial excellence program, improving supply chain excellence and executing a transformation of our structure. When I was fortunate enough to assume the CEO role in February of 2020, I said that we would spend more time looking in the mirror instead of looking out the window. What I meant was that we would be taking a closer view of our core consumer and industrial businesses and determine how increased investment in our people and our technology can better drive growth, improve productivity and generate stronger returns. This chart shows just a sampling of the high-return capital projects we're currently investing around the world, several of which I'll speak to as I talk further about our business growth plans. In total, we expect to invest approximately $325 million in capital in 2022 across our businesses, focused on both growth and productivity. But we will be disciplined -- with these investments and constantly track margin improvement, capital spending effectiveness and, of course, return on investment. Sonoco is a unique packaging company as we offer our customers the strength and stability that comes from nearly 123 years of experience as well as options and flexibilities to meet their changing needs. But the Sonoco of 2022 will be different than Sonoco of just a few years ago. Including the acquisition of Ball Metalpack, we expect sales to grow 30% this year to reach a record of between $7.25 billion and $7.5 billion, which would put us back into the Fortune 500 for the first time and more than a decade. Profitability, as measured by EBITDA, is expected to grow by up to 25%. The mix of our business is also changing with consumer packaging expected to account for 52% of sales, while our integrated industrial paper businesses will be a strong 38%. Our more diversified businesses in the All Other segment will account for approximately 10%. In our Consumer Packaging segment, Sonoco is the global leader in paper food cans, a leading U.S. manufacturer of tinplate food and aerosol cans and a provider of flexible packaging and rigid plastic thermoform food containers. But paper and metal cans are expected to represent well over half of our consumer sales this year with flexible packaging and rigid plastics accounting for the remainder of the segment. With 80% of our Consumer Packaging portfolio focused on fresh, frozen and processed foods, we believe we are uniquely positioned to continue benefiting from elevated consumer at-home eating trends, particularly among younger consumers adopting new cooking habits. In 2021, consumer sales grew 6% to nearly $2.4 billion due primarily to higher selling prices implemented to recover rising raw material and other operating costs. Base operating profit for the segment was approximately $275 million, a 9% decrease from 2020 and largely driven by rising raw materials. The January 26 acquisition of Ball Metalpack for $1.35 billion, clearly fits our strategy by increasing our global can-making franchise, expanding into more recession-resistant consumer markets and growing our already established sustainable packaging portfolio to now include tinplate packaging. Our new metal franchise, now known as Sonoco Metal Packaging is the #1 manufacturer of tinplate aerosol cans for paints, cleaning items and other household products and industrial products. SMP is also a top manufacturer of tinplate food cans and closures and components for packaging tomatoes, beans, private label foods, meats and other vegetables. This new business adds more than 1,300 experienced can-making associates operating in 8 locations throughout the United States. With more than 100 years of experience our metal packaging business as a trusted supplier to blue-chip brands and private label customers. More than $200 million was invested into these operations since 2018, and we produce state-of-the-art 2-piece and 3-piece tinplate cans and a variety of heights and diameters using the most modern technologies available. Let me take a second and introduce you further to our new metal packaging business with this brief video. [Presentation]

I think you can see that we are extremely excited about this acquisition and believe we will be able to take advantage of tremendous synergies with operations, processes and people. Now let me spend some time talking about our other consumer packaging businesses, and there are opportunities for growth, starting with our iconic paper can. The Wall Street Journal recently listed milestones in packaging, in which the writer focused on packaging that over the years was friendlier to consumers and the environment. Listed as one of the key breakthroughs was the development of a tubular paper can for stacked chips, which today, with our global partners, we have turned into a global franchise. With 43 facilities in 16 countries, Sonoco produces more than 7 billion cans annually, which makes us 1 of the top 5 largest can producers in the world. In addition to stacked chips, we're a leading provider of paper cans for items such as refrigerated dough, powdered beverages, nuts, powdered infant formula, coffee and an assortment of other food products. We also are a leading provider of paper and plastic tubes used for adhesives and sealants. New can options are what our customers are looking for around the world. And over the next 2 years, we plan to invest approximately $60 million to expand capabilities and capacity to meet that growing demand. We're actively working with several large customers in Europe to convert their plastic and glass packaging into more sustainable all-paper containers. This year, we added a new high-speed can line to our operations in Poland and are investing in new paper-bottom capabilities throughout Europe. Over the next 2 years, we will also be building a new can production plant in Malaysia, which will be our third facility in Malaysia to produce both cans and metal closures for new customers. We'll further add capabilities in Europe to serve growth both on the European continent and in the Middle East. We just approved today $11 million in capital to add a second can line in Brazil, which will double the capacity of a new plant we opened just 2 years ago. We're also developing new capabilities for a food customer in North America, and we are developing new seamers, sealing and paper-bottom capabilities to be deployed around the world. In our flexible packaging business, we couldn't be more proud and excited about the improved performance as well as its future growth opportunity. Following a strong result in 2020, we produced record top line and bottom line results in 2021 with volume mix growing 3.5%. Sonoco's flexible packaging strategy is focused on higher-growth niche markets that match our capabilities. To meet future growth, we have authorized more than $60 million in capital to fund new "stand up pouch making" capabilities and will expand our gravure and flexographic press and laminator capacity. We also are working with our customers to produce easier-to-recycle mono-material, polyethylene and paper structures. Consumers working from home are driving a change in eating habits that is benefiting our prepared and specialty food trade business. These consumers are enjoying the improved quality and convenience of frozen and refrigerated meals that utilize our dual ovenable and recyclable plastic trays. While we have seen up to double-digit volume growth in this business, we also are seeing new demand for frozen and refrigerated food trays used in schools, hospitals, nursing homes and other institutional venues. Working with the new customer, we recently increased capacity in our operation in North Carolina to capture this new growth. We're also receiving increased request for easier-to-recycle thermoform tray options utilizing no pigment and increased recycled content. Now let me switch gears and talk about the solid turnaround we've experienced in our industrial paper packaging segment in 2021, and how we believe it is set for even better performance in 2022 and beyond. Sonoco is a global leader in the production of uncoated recycled paperboard along with tubes, cores and cones used in industrial applications across many different markets. Globally, we operate 24 paper mills with 33 machines, which have the capability of producing approximately 2 million tons of URB annually as well as corrugated medium here in the United States. About 55% of our URB is used internally by our integrated converting operations. The rest of our paperboard is sold to trade customers with the bulk in the U.S. going to the growing tissue and tile markets as well as other industrial and consumer applications. Our industrial domestic sales increased nearly 21% to $1.42 billion in 2021, while international sales increased 28% to just over $1 billion. The increase in global sales resulted from higher selling prices implemented to cover inflation on our costs. Additionally, strong volume mix growth of nearly 4%, especially in global tubes and cores benefited from the recovery of the disruption caused by the pandemic. Segment-based operating profit increased year-over-year by nearly 23% to $227 million, driven by volume gains, strong productivity improvement and a positive price/cost relationship. We have made significant progress on Project Horizon, which will transform our corrugated medium machine here in Hartsville to produce uncoated recycled board. Let me share a brief video of the project narrated by James Harrell, President of our Global Industrial Paper business to provide a more detailed update. [Presentation]

I have to agree with James and say thank you to our team, as this is the most complex project our company has ever undertaken. We will experience some downtime during the conversion, as James said, in the third quarter, but we expect this will only have a minor impact on profitability this year, while providing future savings of approximately $30 million a year. We have a number of other growth and margin improvement projects underway in our industrial businesses. and we're especially excited about our opportunities to further grow our Sonopost fiber protective technology around the world. We recently opened a new 110,000 square foot plant in Tulsa, Oklahoma, where we're combining an existing tube and core operation with 2 new fiber Sonopost lines to serve growing appliance and HVAC customers in the South and Western United States. We also just opened a new Sonopost operation in Poland, and we're working on growth opportunities with new customers in Turkey and Mexico. Our fiber protective business is attracting a lot of new orders as customers are looking for a more sustainable and durable protective packaging alternatives. Finally, we're a leading provider of health care, protective and retail packaging and a manufacturer of industrial plastic products, which we operate in our All Other group. These businesses reported net sales of $758 million in 2021, which was a 25% decrease due to the divestiture of our global Display and Packaging business. Strong volume mix in the remaining businesses as well as higher selling prices somewhat offset the divested sales. All Other base operating profit decreased 30% to $63 million, again, driven predominantly by the divestitures. We're expecting solid improvement in 2022 due to improved cost recovery, strengthened demand and some self-help actions. We're extremely excited about growth opportunities in our ThermoSafe cold chain packaging and logistics business. Volume/mix grew 12% in 2021 due primarily to new launches and new COVID-19 vaccine orders. One of our new products, Pegasus, is the world's first FAA-approved passive temperature-controlled unit load device for pharmaceuticals. We have been building out air traffic lanes with a number of major international airlines and expect to increase unit development over the next 2 years. ThermoSafe was also extremely busy in the fourth quarter of 2021 and first quarter of this year, building and kitting shippers for transporting COVID-19 vaccines around the United States. Packaging plays a fundamental role in providing sustainable, safe and hygienic delivery systems for food, medicines and other essential products around the world. We believe the value is more than just its impact on the planet. As a global leader in the production of sustainable packaging, we believe it is of utmost importance to address environmental challenges such as climate change, based on data-driven scientific criteria. Sonoco is committed to measuring, reporting and reducing our greenhouse gas emissions as well as energy and water consumption and waste generation in our operations around the world. While we have reduced normalized greenhouse gas emissions by approximately 25% since 2009, we also are committed to advancing our environmental progress by setting ambitious new targets to reduce our global greenhouse gas emissions in line with the Paris Climate Agreement, which is to limit global temperatures to warming well below 2 degrees Celsius above pre-industrial levels. Specifically, Sonoco is committing to reducing absolute Scope 1 and 2 greenhouse gas emissions by 25% by 2030 from 2020 base year. We have also committed a reduced absolute Scope 3 emission by 13.5% by 2030 while working with our customers and suppliers to develop innovative solutions that reduce waste and improve recyclability. I'm pleased that these objectives have been validated by the Science Based Targets initiative. In addition, we're actively studying necessary operational changes, technology developments and market changes that would be required to achieve net 0 greenhouse gas emissions by 2050. As a leader recycler in the U.S. with recycling capabilities across the globe, Sonoco is uniquely positioned to understand the challenges associated with both the beginning and end of life. We are improving packaging design and investing in infrastructure within our material recovery facilities to expand the slate that can be successfully collected, sorted and processed. We have further developed our EnviroSense portfolio, which includes recyclable packaging such as paper-based and steel containers, mono-material flexibles and recyclable thermoform packaging. We are working to increase recycled content in our products and are exploring use of alternative materials such as bio-based resins. In closing, we're extremely excited that our core consumer and industrial businesses are well positioned to achieve strong performance in 2022. We -- recently, we reported that we expected our operating results for the first quarter to be significantly better than our original expectations due to strong price cost recovery across most of our businesses as well as benefits from the Metal Packaging acquisition and strong demand in several of our divisions. We expect our strategy of investing in ourselves, which is targeting a record $325 million in capital spending in 2022. We'll continue delivering enhanced growth and improved productivity. We expect to further simplify our structure, creating a more effective and efficient organization while managing our portfolio for fit around fewer but larger businesses. The complementary addition of the Metal Packaging business fits our strategy by increasing our can-making franchise and expanding our position to more defensive consumer markets while providing significant synergy, technology and process optimization opportunities. Finally, we're committed to returning cash to shareholders as illustrated by the 3 -- the record $397 million provided in 2021. As I stated earlier, Sonoco's strategy is to be the benchmark company for yield and stability in the packaging industry. As an illustration of the strategy and in anticipation, the strong financial performance going forward, I am pleased to announce that your Board of Directors today approved a nearly 9% increase in quarterly dividends, with shareholders now receiving $0.49 per share to be paid June 10, 2022, to shareholders of record as of May 10, 2023. Sonoco has paid dividends for 388 consecutive quarters dating back to 1925, and we have increased annual dividends for 40 consecutive years. Now annualized at $1.96 per share, our dividend provides approximately a 3% yield to our current stock price, which is more than double the dividend yield for the S&P 500. Before taking questions, I wanted to show pictures of a monument we recently built in front of the corporate headquarters, which honors our past while looking forward to our future. The monument was designed by Sonoco's engineering team and was carefully constructed from bricks and [ facade tiles ] as reclaimed for what we used to call the Old Main Office Building, which was removed last year to make way for the new finished goods warehouse that is part of Horizon. Standing for 100 years, Old Main served as our corporate headquarters until 1977 and we wanted to capture a piece of our history again, as we look forward to our strong future. Now we'd be glad to take any questions that any of you may have.

[indiscernible] coming back on the 500, S&P 500, I think, is wonderful.

Thank you, Larry. And so do I. Any other questions? Okay. Well, let me say thank you for being with us today and for entrusting us with your investment. I want to personally thank our 22,000 teammates, our customers, the communities we serve and you, our shareholders, for your support of our great company. So with that, Mr. Chairman, I move we adjourn the 2020 meeting of shareholders.

I second.