Financial Data and Key Metrics Changes - In 2025, the company achieved approximately 37% year-over-year adjusted EBITDA growth in North America, with adjusted EBITDA for the fourth quarter reaching $560 million [23][26] - The full year 2025 net sales for the standalone International Paper are projected to exceed $15 billion, with approximately $2.3 billion of adjusted EBITDA expected to accelerate rapidly over the next 24 months [14] - The company expanded adjusted EBITDA margin by 230 basis points in 2025, despite facing $958 million in accelerated depreciation due to footprint optimization and higher depreciation related to the DS Smith acquisition [25] Business Line Data and Key Metrics Changes - North America saw significant progress with a $510 million run rate cost benefit achieved through the 80/20 plan, while EMEA is in the early stages of transformation with 20 site closures impacting approximately 1,400 roles [23][24] - The standalone EMEA Packaging business is projected to have full year 2025 net sales of approximately $8.5 billion and adjusted EBITDA of around $800 million [17] Market Data and Key Metrics Changes - North America is characterized by a high degree of supply integration and steady demand growth, while EMEA has more localized dynamics with relatively higher demand growth [11] - The company expects to outperform the industry in both regions, with North America projected to grow 3-4 percentage points above the underlying market [23][41] Company Strategy and Development Direction - The company plans to create two publicly traded, scaled regional packaging solution leaders in North America and EMEA, aiming to maximize long-term value for shareholders [5][10] - The 80/20 performance system will continue to guide the company's operations, focusing on simplifying, segmenting, resourcing, and growing to drive sustainable value creation [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory for 2026, projecting enterprise net sales of $24.1 billion to $24.9 billion and adjusted EBITDA of $3.5 billion to $3.7 billion [41] - The company anticipates that the separation will enable both businesses to accelerate progress toward maximizing long-term profitable growth through greater speed, agility, and differentiation [10][43] Other Important Information - The separation of the EMEA Packaging business is expected to be completed within 12-15 months, with plans for the new company to be listed on both the London and New York Stock Exchanges [20] - The company plans to invest approximately $400 million in EMEA throughout 2026 to fund ongoing transformation and 80/20 implementation [22] Q&A Session Summary Question: Can you provide details on the Free Cash Flow guidance? - The Free Cash Flow guidance of $300 million to $500 million does not include price impacts, and a price letter has been sent to customers [46][47] Question: How should we think about corporate costs relative to the guidance? - The guidance includes corporate costs, and there will not be a significant overall increase in corporate costs post-separation [58][61] Question: Why is the separation process expected to take 12-15 months? - The timeline is due to the accounting complexities involved in the separation, which is primarily an accounting exercise [64][66] Question: What confidence does the company have in achieving the second half targets for 2026? - The company has confidence due to actions already taken and the expectation that costs will normalize, leading to improved performance [70][72] Question: Can you discuss the relative profitability of new wins versus lost business? - The company has maintained pricing discipline and is confident that the new volume wins are of high quality and profitability [81][83]

Group 1 - Saica Group has acquired the paper and corrugated board recovery operations of FCC Ambito, enhancing its recovery footprint in Spain through its waste management arm, Saica Natur [1][2] - The acquisition includes seven facilities located in Madrid, Cáceres, Valladolid, Asturias, Vizcaya, León, and Toledo, focusing on the recovery of paper, cardboard, and other non-hazardous waste [2][3] - The acquired business employs over 150 people and reported a turnover of €33 million ($38.89 million) in 2024, increasing Saica Natur's total operations to 47 plants, including 36 in Spain [3] Group 2 - Saica Group's president and CEO, Susana Alejandro, stated that this acquisition consolidates their presence in Iberia and strengthens their value proposition for customers [2] - FCC enviro CEO, Íñigo Sanz, mentioned that the transaction is part of their asset rotation and optimization strategy to maximize shareholder value [4] - Saica Group operates across four divisions: Saica Paper, Saica Natur, Saica Pack, and Saica Flex, employing over 12,000 people with operations in Europe and the US [4]

Core Insights - Swiss packaging company SIG has appointed Mikko Keto as its new CEO, effective in the first half of 2026, transitioning from his role as group CEO at FLSmidth [1][2] - Keto has a strong background in business transformation, having doubled FLSmidth's value during his tenure and previously held senior positions at Metso, Nokia Networks, and KONE [2][3] - The SIG Board chairman expressed confidence in Keto's ability to drive growth and innovation, aiming to create a simpler and more agile company [4] Company Overview - SIG, established in 1853, specializes in aseptic carton, bag-in-box, and spouted pouch packaging solutions [4] - The company reported revenue of €3.3 billion ($3.82 billion) in 2024 and produces 57 billion packs annually, employing 9,600 people across over 100 countries [5] - In November 2025, SIG's new DomeMini carton bottle format was introduced by SalzburgMilch, marking a significant innovation in mobile dairy consumption [5][6]

Group 1 - The current investment environment is characterized by changing interest rates, inflation, and geopolitical uncertainty, making dividend stocks more attractive for their stability and income generation [1] - Dividend Aristocrats are S&P 500 companies that have consistently paid and increased dividends for at least 25 consecutive years, demonstrating resilience in challenging environments [2] - Selecting stocks randomly is not advisable; a strategic approach is necessary to identify undervalued stocks with strong fundamentals [2] Group 2 - A stock screener was utilized to identify high-yielding companies, focusing on those with a price-to-earnings (P/E) ratio between 10 and 20, and consensus ratings of "Moderate" to "Strong Buy" [3][4] - Amcor Plc (AMCR) is highlighted as the first Dividend Aristocrat, with a P/E ratio of 11.76 compared to the sector average of 23.25, indicating it is undervalued [5][6] - Amcor reported a 44% year-over-year sales increase to nearly $5.1 billion, despite a net loss of $39 million, and offers a forward annual dividend of $0.51 per share, yielding around 6% [7]

Core Insights - Amcor has launched a new machine direction orientation (MDO) line in Peru to enhance production of AmPrima Plus films and support sustainable packaging initiatives in Latin America [1] - AmPrima Plus is designed for recyclability while maintaining the performance of conventional flexible packaging, allowing customers to transition to recycle-ready solutions without compromising quality [2] - The new MDO line aims to improve production efficiency and meet the increasing demand for sustainable packaging in the region [1] Sustainability Benefits - AmPrima Plus offers significant sustainability advantages over multilayer pouch structures, including a 26% lower carbon footprint, a 22% reduction in non-renewable primary energy demand, and a 19% decrease in water consumption [4] - The technology has already been implemented in various products across Latin America, including packaging for liquid baby shampoo, dulce de leche, and household products [3] Company Developments - Amcor's Latin America marketing director emphasized the alignment of the new MDO line with the company's commitment to sustainability and the benefits it brings to customers [5] - In October 2025, Amcor introduced AmSecure, a next-generation packaging solution for the healthcare industry, and appointed a new CFO, Stephen R Scherger, effective November 10, 2025 [6]

Core Insights - RIT Capital Partners holds $19,839,800 worth of Smurfit Westrock Plc shares, representing 2.49% of its portfolio, indicating confidence in the company's potential [1] - Seaport Global Securities upgraded Smurfit Westrock Plc from "Neutral" to "Buy," setting a price target of $52, reflecting optimism about the stock's future performance [2] - The investment firm believes the recent share price decline is due to investor concerns regarding European containerboard capacity expansion, but anticipates improvements in pricing for recycled containerboard medium [3] Company Overview - Smurfit Westrock Plc is engaged in the development and supply of packaging solutions globally, including corrugated boards, solid boards, and hexacomb packaging for various applications [5] - The company is expected to present a five-year strategy plan in February 2026, which may include $400 million in initial synergies, asset repositioning, cost reductions, and growth opportunities in its North American box business [4]

Market Overview - Mid-cap stocks advanced in Q3, with the Russell Midcap Index returning 5.3%, driven by monetary policy shifts and stabilizing earnings [2] - Value stocks outperformed growth stocks, with the Russell Midcap Value Index returning 6.2% compared to 2.8% for the Russell Midcap Growth Index [2] Policy and Sentiment - Investor sentiment improved due to the passage of the One Big Beautiful Bill and progress on trade agreements, reducing policy uncertainty [3] - Earnings estimates stabilized, particularly in technology and AI sectors, despite some economic segments remaining weak [3] Portfolio Performance - The ClearBridge Mid Cap Strategy outperformed its benchmark, with strong stock selection in consumer staples and health care [4] - Performance Food Group and Casey's General Stores were key contributors, benefiting from strategic initiatives and strong execution [4] Sector Contributions - Health care was a significant driver of outperformance, with companies like argenx and Alnylam Pharmaceuticals showing strong results [5] - AppLovin's stock rallied due to excitement around its new e-commerce business, indicating potential for cash flow growth [6] Challenges - Stock selection in consumer discretionary and materials sectors posed challenges, with Chewy and Crown Holdings underperforming [7][8] New Positions - A new position was initiated in QXO, a building materials distribution platform, expected to consolidate the industry and improve efficiency [9] - Bio-Techne was also added to the portfolio, capitalizing on recent weakness and offering durable revenue streams [10] Exits - The position in ATS Corporation was exited due to leadership changes raising concerns about future performance [11] Outlook - The outlook for mid-cap equities remains constructive, with expectations for selective stock picking amid potential volatility [13] - The focus will be on businesses with competitive advantages and resilient cash flows [14] Portfolio Highlights - The ClearBridge Mid Cap Strategy saw contributions from 10 of 11 sectors, with IT and industrials being the largest contributors [16] - Stock selection in consumer staples, IT, and health care sectors positively impacted performance, while consumer discretionary and materials sectors detracted [17]

Core Insights - DS Smith has partnered with Carlsberg Britvic to upgrade its packaging to a new OTOR8 'Bag-in-Box' design, aiming to enhance efficiency and sustainability in the supply chain [1][4] - The new design features an 8-sided shape that allows for an average of 25% more boxes to be loaded onto each pallet, optimizing logistics and reducing the number of pallets and lorries needed [2][3] - Carlsberg Britvic has invested over £9 million in carbon-cutting technology in the past three years and sources 75% of its grid electricity from solar panels, demonstrating a strong commitment to carbon reduction [4] Company Initiatives - The OTOR8 design is part of a broader initiative by DS Smith to improve supply chain efficiency and sustainability, aligning with its Circular Design Metrics to evaluate packaging circularity [5][6] - The partnership aims to reduce carbon emissions and improve warehouse storage efficiency, while also minimizing the risk of leakage and enhancing packaging stability [3][5] - Carlsberg Britvic produces over 25 million litres of soft drinks annually for the hospitality sector, emphasizing the importance of high-quality packaging in its operations [5]

Core Viewpoint - Sonoco Products Company has agreed to divest its ThermoSafe business unit to Arsenal Capital Partners for up to $725 million, marking a significant step in its portfolio transformation towards becoming a leader in global metal and fiber packaging [1][2]. Group 1: Transaction Details - The deal consists of a base purchase price of $650 million, with an additional $75 million contingent on ThermoSafe's performance in 2025 [1]. - The transaction is expected to be completed by the end of 2025 [1]. - Morgan Stanley & Co provided financial counsel to Sonoco for the transaction, while Freshfields served as the legal advisor [4]. Group 2: Business Performance - In 2024, ThermoSafe reported sales exceeding $240 million and proforma adjusted EBITDA of $50 million [3]. - The ThermoSafe portfolio includes advanced technology with bio-based insulation and reusable options, catering to a wide range of temperature requirements [3]. Group 3: Strategic Implications - The divestment is part of Sonoco's strategy to streamline operations from a diversified portfolio into two core global business segments, enhancing operational efficiency and focus [2]. - The sale is anticipated to reduce Sonoco's net leverage ratio to approximately 3.5, excluding any additional consideration from the deal [3]. - Sonoco's president emphasized that the transformation allows for sustainable growth and value creation for customers [5].

Core Insights - International Paper reported second quarter 2025 net earnings of $75 million, or $0.14 per diluted share, with adjusted operating earnings of $105 million, or $0.20 per diluted share, and net sales of $6.8 billion [1][4][20] Financial Performance - The company experienced a significant increase in net sales, rising from $4.7 billion in the second quarter of 2024 to $6.8 billion in the second quarter of 2025 [4][20] - Adjusted operating earnings per share decreased from $0.55 in the second quarter of 2024 to $0.20 in the second quarter of 2025 [3][30] - Cash provided by operations was $476 million in the second quarter of 2025, compared to $365 million in the same quarter of 2024 [4][38] Segment Performance - Packaging Solutions North America reported net sales of $3.86 billion in the second quarter of 2025, up from $3.63 billion in the second quarter of 2024, with an operating profit of $277 million [7][9] - Packaging Solutions EMEA generated net sales of $2.29 billion in the second quarter of 2025, significantly higher than $328 million in the same quarter of 2024, but reported an operating loss of $1 million [7][9] - Global Cellulose Fibers segment saw net sales of $628 million in the second quarter of 2025, down from $717 million in the same quarter of 2024, with an operating loss of $4 million [7][10] Strategic Initiatives - The CEO highlighted the company's ongoing transformation and the successful integration of the DS Smith acquisition, which is expected to enhance revenue and earnings in the upcoming quarters [2][5] - The company is focused on achieving cost-out initiatives and maintaining a strong customer experience while securing a competitive cost position [2][5] Special Items - Net special items in the second quarter of 2025 amounted to a net after-tax charge of $34 million, compared to a charge of $204 million in the first quarter of 2025 [11][30] - The company incurred costs related to the DS Smith combination and severance, which are not reflective of ongoing operations [11][12]