Good day, ladies and gentlemen, and welcome to the Q2 2013 Sonoco Earnings Conference Call. My name is Stephanie, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. And I'd like to turn the call over to Mr. Roger Schrum, Vice President, Investor Relations and Corporate Affairs. Please proceed, sir.

Thank you, Stephanie, and good morning, everyone, and welcome to our 2013 second quarter earnings investor call. This call is being conducted on July 18, 2013. Joining me today are Jack Sanders, President and Chief Executive Officer; and Barry Saunders, Vice President and Chief Financial Officer. A news release reviewing the company's second quarter financial results was issued before the market opened today and is available on the Investor Relations section of our website at sonoco.com. In addition, we will refer to a presentation that is posted to the Investor site during this call. I'll briefly remind you that today's 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, I'll turn it over to Barry.

Thank you, Roger. I will begin on Slide 3, where you see that this morning, we reported second quarter earnings per diluted share on a GAAP basis of $0.53 and base earnings of $0.59. These results work towards the upper end of our previously provided guidance of $0.56 to $0.60, and improved from last year's base earnings of $0.58. Before reviewing the base P&L for the quarter, I will mention that a reconciliation of GAAP to base earnings is in today's press release and summarized on this slide. But the difference between GAAP and base is due to net restructuring charges of $0.06 per share, related primarily to the announcement of the planned closure of the thermoformed plastics plant in Ireland and other reductions enforced and additional charges of previously announced actions. Turning to Slide 4, you find the base P&L where you see sales were $1,226,000,000, which represented a 2% increase over the prior year, driven by higher volume, which will be explained on the sales bridge. Gross profit was $222.6 million, which was $6 million or 2.8% higher than last year, with our gross profit margin at 18.1%. Selling and administrative expenses and other charges were $121.8 million, which was a 2.9% increase above last year, which can essentially be explained by merit and other inflationary increases. Thus, EBIT was $100.8 million, which was 2.8% above last year, and you'll see all of the drivers of the change in the EBIT bridge in just a moment. But I will take a chance to mention that pension and postretirement expense was $5 million higher year-over-year, $2 million of which was related specifically to the final recognition of some changes made to our Canadian defined-benefit plan related to the settlement of liabilities for employees that moved from a defined benefit…

Thanks, Barry. Let me add some additional color on our second quarter and talk briefly about my optimism for the second half of 2013. As Barry mentioned, we had a pretty good second quarter that, quite frankly, could have been a little better if not for some discrete onetime items, specifically the Canadian pension issue, which cost us about $0.01 per share. Overall, we had record sales, record gross profits and record second quarter cash flow. Year-over-year, free cash flow improved by more than $100 million, and we're comfortable we will exceed $150 million in net free cash flow for the year after we pay dividends. We're also encouraged by what we see in some of our individual businesses. Our tube and core operations continue to show improvement, with the North American business registering the highest production volume on a tons-per-day basis since mid-2010. European tube and core volumes also improved due to a strong double-digit growth in the frontier markets of Eastern Europe and share gain in our legacy Western European markets. As we enter the third quarter, volumes remain in pretty good shape, although I will point out that on a per-day basis, normally, volumes decline somewhat from Q2 to Q3 in both the U.S. and Europe, so we remain cautious in our assumptions. Our Paper operations in North America rebounded during the second quarter, and volumes remained strong entering the third quarter. We do face negative price/cost headwinds as OCC prices have already increased in July, to $130 a ton in the Southeast. And we could see additional upward price movement during the quarter. To help offset the increase in fiber costs, we have implemented a $40 a ton increase in uncoated recycled paperboard and a 5% increase in tubes and cores. These increases should help partially…

[Operator Instructions] The first question comes from George Staphos from Bank of America, Merrill Lynch.

I guess the first question I had, and again appreciate all the color during the presentation, the press release spoke a number of times to both higher labor costs and also higher maintenance costs. I am guessing that perhaps some of the maintenance spending is related to this new maintenance program. But could you give us a bit more detail as to what was driving those 2 factors? Was it the Affordable Care Act? Was it related to the Canadian Pension issue you mentioned? What was driving those 2 factors?

Well, George. And I would tell you there's, I would say, there's 2 basic fundamentals driving those factors. One is that higher repair and maintenance spending, there's also labor included in the higher repair or maintenance spending. In other words, we have to use our people to make the installations. So as they make those repairs, we get a little bit higher maintenance spending or a little bit higher labor costs. But also, the pension cost is disproportionately skewed, probably, to the industrial side of our business. Because of just the population. So some of that higher labor costs is the pension increase year-over-year pension cost that you're seeing, as well as wage increase that actually went in, effective June or July 1 -- June 1.

Okay. And the maintenance program itself, how is that progressing? And would it be easy enough that will lap whatever increase in expenditure you're seeing from that by third or fourth quarter?

Well, I do think it's going to continue throughout the year, but I think it will continue at a decreasing pace as the year progresses, with one caveat I want to talk about. But we are -- I'm very, very pleased with where it's going and the results we're going to see. We're making good progress, as well as bringing the equipment back up to where we wanted to be. But I do want to point out and kind of recast productivity in Paper just a moment. If you look at unit cost to produce, which is really what we're chasing, every month this year, the unit cost of producing paper has gone down. And in fact, the unit cost to produce in June -- in July -- in June, excuse me, was less in 2013 than it was in 2012 in Paper. And That's one of the first times we've seen that this year. And of course, that's what we're looking for. So it's going in the right direction. I think it's going to continue to go in the right direction. And we're going to get easier comps as the year goes on, but I'm less concerned about the comp and more concerned about the actual unit cost reduction on an ongoing basis.

Okay, 2 last quick ones, and I'll turn it over. And maybe you gave part of the answer to the question I want to give you here, first. I mean, if I look at the Paper and Industrial segment, EBIT was down versus 2Q, which was down versus the prior year. And you're more or less flat to slightly down frankly versus 2Q '10. So what changes that pattern? How much of it is driven by improving productivity and new maintenance program and anything else that you can think of? And then you went through quickly some portfolio and restructuring actions that you've taken, I guess, as the quarter was ending whereas third quarter has begun, can you just give us a laundry list of what you're working on right now? I'd missed all of the details.

Okay. Well, I would certainly say that what we just spoke of is certainly impacting those numbers, those higher pension costs. We need productivity to improve in, not only paper, but certainly in the ICD, tube and core business in North America as well. I would tell you that probably the biggest drag I see is the rest of the world. Europe, South America and even Asia are not doing as good as the rest of the world on the industrial side. And that to me is the biggest drag, and that'll rebound as the global economy picks up. But that's really what we have to drive. And I would tell you, in Europe, we are looking at some options, as I mentioned, I'm not really ready to speak to them just yet but to continue to improve our cost structure for our Industrial business in Europe.

The next question comes from Scott Gaffner from Barclays.

Jack, you mentioned better prices in the Consumer business. I was hoping maybe you could just break that down a little bit? Was that in the composite cans or maybe on the flexible packaging? Where are you getting most of the pricing in consumer?

Well, I would tell you we've put in price increases, most of the consumer is contractual. So the price increases that are going through for the most part our contractual increases, based upon increased costs. We did have a general increase in composite cans that we put, I think sometime in the second quarter actually, that we're now beginning to get full traction on. But Scott, I did -- it's hard for me to do that because it's basically contractual adjustments that we're putting through.

And just looking at the growth strategy within composite cans, I think at the Analyst Day you mentioned new shapes as being sort of a growth area for you within composite cans. Can you talk about what you've seen with those offerings? Has there been a lot of customer uptake? Or are you still working on those projects?

Well, I would say there was 2 areas I'd talk to, Scott. One was conversion our self manufacturer, specifically in this Salt Lake products, and we have had some solid success there. And we're very pleased. As far as shape containers, we still have some very strong work going on and some interest there. We're looking at technology that exists in other areas of the world and looking at how we apply that back to the North American market and what new products we could actually put into a unique shape can, powdered-stuff like flour, something like that. So we're still very optimistic about opportunities and continue to aggressively pursue them.

Okay. And then just lastly, on composite cans, I think you mentioned nuts, doughs and a couple of other categories that were relatively strong in the quarter. Are you taking market share there? Or is this underlying growth in the market that's rebounding? Can you just provide a little bit of color on what was providing that uplift?

It's just demand, how demand flowed through in that particular product for the quarter.

The next question comes from Ian Zaffino from Oppenheimer. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Just quickly, on pension, the under-funded amount, is there a potential maybe -- or have you thought about doing some type of buyout or prefunding of the pension or should I -- maybe sell the liability?

Ian, this is Barry. Certainly, with the level of discount rates being where they are, we wouldn't give consideration to a buyout or doing anything else with planned design. As I did mention, we've already seen just with the uptick in rates, thus far, a notable improvement in that to almost an 86% funded status on the qualified plans. So we're comfortable with where it is and where it is likely to go as with any eventual rate increase. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: And as far as the pension assets, where are they invested in? What's the breakout maybe between...

Sure, we've got about 52% in global equities, about 35% in fixed income and then 11% or so in other classes real estate, alternative investments, et cetera. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Okay. So I guess as the market moves up and we kind of inflate our way out of it, that -- both those things fix themselves?

That's correct. And thus far, this year, certainly it's fair to say the equities have performed well but with the uptick in rates, that's been partially offset by the fixed -- negative fixed income return.

The next question comes from Philip Ng from Jefferies. Philip Ng - Jefferies & Company, Inc., Research Division: Your volumes for Consumer Packaging has been soft for quite a bit, it's finally stabilizing. And it sounded like your Display business is seeing some momentum. Is that a pretty good read through for growth down the road? And do you have a better line of sight now from a volume standpoint?

Well, I certainly think activity in Display is a good read for future activity of products. So we are pleased with that as well. I would also tell you we've put in some very strong talent in that business several years ago and expected to improve it, improve that business. That's exactly what they've done. We've recently won that Energizer business, which is a bit of a different model for us, and that's ramping up, as well as we continue to do well in our pack centers in our blades and razors. So we are pleased and do see increased activity there as being a positive for our future product volume. Philip Ng - Jefferies & Company, Inc., Research Division: Got you. And then just switching gears a little bit. Your Protective Packaging business, at least from a growth standpoint, has been pretty solid, post the Tegrant acquisition, and you're obviously adding capacity for your auto business. But from a margin standpoint, it's been kind of flattish. I was expecting more of the synergies to flow through more fully. Can you give us a little update on what your thoughts are from a margin standpoint, going forward?

Well, I think I've been pretty consistent with this from the beginning, I believe it is a 10% margin business. I believe it will be a 10% margin business. It certainly has improved since the first quarter as we've had it, now been running at this 8%. I think one of biggest issues that we're having in this business right now is certainly the Alloyd business continues to not perform at a level of expectation, and that's pulling those overall margins down a little bit. So we need to improve on Alloyd. And I think ThermoSafe, they're somewhat seasonal in their makeup, and they're entering their strong season. So I think that they're -- as they enter a very strong season, you'll see some impact, I think, on margins as their business picks up. Philip Ng - Jefferies & Company, Inc., Research Division: Got you. And just one last question. You mentioned how, at least on the industrial side, the rest of the world is seeing somewhat of a slowdown. I know in the past you've talked about potentially getting bigger in Brazil and Southeast Asia. Do the recent slowdown in the macro environment in those regions give you pause on expanding? Or would you look more at deploying growth capital in the U.S. instead?

Well, I would tell you that right now, for Brazil and our growth, if you will, is really focused right now on flexibles. We're looking for opportunities in flexibles, and Brazil still remains on our radar screen. And I would tell you, in Southeast Asia, our Southeast Asian business, absent Thailand, which is a restart from a flood, is not bad. It's the China business that's a little bit weak, but Southeast Asia is not bad. We've looked for consolidating tube and core opportunities or additional growth opportunities in tube and core and our flexibles and composite cans as well. And that we just opened a new plant in Malaysia for composite cans. And even in China, we're putting in a new composite can plant perhaps in Southern China. So we see good composite can growth throughout Southeast Asia.

The next question comes from Ghansham Panjabi from Robert W. Baird. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: It's Matt Wooten, sitting in for Ghansham today. We went back to the Consumer business for a second, I know it's been an area of concentration on the call. But in the areas that are generating year-over-year volume gains like blow-molded packaging and flexible packaging, how much of that growth is based on new business wins or share gains versus underlying improvement in industry trends?

It's certainly a combination of both. I would think blow molding would tend to be more share gain, as well as some underlying growth. And flexible is probably similarly -- the exact spread is hard for me to say, it's a bit of both. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then as a follow-up, it certainly seems like some of the larger CPG companies are getting more aggressive on their focus on volume growth in the back half of the year, including some increased promotional activity. Have you seen an uptick in orders or any anecdotal evidence that supports this?

Well, certainly, we see it in on the -- in the Display and Packaging business. We see the activity in that business, which is a precursor to some of that. This is normally the time that we move into a consumer trend of upward volumes and progressively increasing as the quarter goes on is what we would expect to see. We're real early into this, I really can't say yet, but it's certainly what we expect to see.

The next question comes from Chip Dillon, Vertical Research Partners.

First question is on the -- as you look at the OCC cost creeping up, obviously, that's one cost that you need to recoup. You mentioned the price/cost issue with your pricing. Are you seeing other costs we should note maybe in the resins area that in your particular -- with your particular needs that also need to be recouped?

Well, I would tell you, on a consistent basis resin is kind of flat. We do have some modified -- excuse me, we do have some specific instances where some resins may be rising. And of course, outages impact that for short periods of time. But I would say for an extended period, we see resins as kind of flat. And OCC is the only other one that would really be volatile for us right now.

Okay. And then, I guess taking a step back, it's been a few years since you did Tegrant. And from everything I can see, it looks like that is -- I would assume, has probably exceeded what you expected, certainly has met what we were expecting, just sort of with the readthrough in the Protective Solutions segment, et cetera. What -- financing costs, even though they tend to pick up in some of the longer term rates, seem to still be pretty low. And I was wondering what you're seeing out there, could there be another situation like that? Or are you focusing more on those first 2 objectives, where it's more of an internal focus?

Well, I would tell you that we certainly are internally focused to improve our existing operations. But also, what we've said specifically is inside the platforms that we've now defined, Protective, Consumer and Industrial, we will make bolt-on acquisitions and we want to grow certain businesses. Protective Solutions is definitively a business we want to grow. And if an opportunity comes up for us to make consolidating acquisitions in Protective Solutions, we're going to make it. We're going to -- if it makes sense, and it's something that we feel we should do. That said, there's also flexibles, some consumer areas as well, emerging market tube and core, all those things are still in the growth pipeline for the business. And we will look at leveraging the balance sheet if an opportunity comes along that makes sense for us to do so.

Got you. And then -- and the last question is -- I'm not sure if you mentioned this before, but it looks like CapEx is trending toward about a $200 million number this year at exactly pretty much what your depreciation rate is. Do you see that, first of all, being the case? And then, let's say, if we exclude any major acquisitions or divestitures, would that number change a lot as you look into next year? There -- I mean, you did mention that you have some growth opportunities in Asia, for example, in composite cans. Will that maybe cause a ramp-up in CapEx next year?

Well, I would think that one of the things that's driving CapEx up this year is the completion of the biomass boiler project here in Hartsville. That was a $75 million project in total, spread over 2 -- a little over 2 years. So we're finishing that. I would expect capital to drop to its normalized level between $170 million to $180 million, $185 million, somewhere in that range, going into 2014, yes.

The next question comes from Alex Ovshey from Goldman Sachs.

If I look at your EBIT bridge and I take the productivity number and thus take out the other line, the other costs. That number has actually been negative over the last couple of years. Not much of a material deviation from where the company has been in maybe over the last 5 to 7 years? And so just as you look forward, is there any visibility on when that productivity other line really begins to improve for the company and begins to be additive to the EBIT line instead of a drag?

This quarter. I expect you're going to see a positive comparison this quarter. And certainly, as we've said, it's our goal to have productivity to cover All Other, and I would throw in pension as well. We would like for it to cover that. I'm not sure it can but, certainly, that's what we're trying to accomplish. And that is coming very soon.

Got it. Okay, we'll look for that. And you're a B side, I believe there's a price increase out there in the marketplace right now. Can you talk about your expectations for your B pricing and what kind of leverage you would have in the Industrial business to changes in your B pricing in the market?

Well, we finished up a $25 increase from earlier in the year, that's now completed and this increase is really to recoup continued costs increases and rising OCC prices. It was out at $40 a ton. We're just in the early phases of it. I will tell you, however, it's been supported in the marketplace because, again, I think all the players in the market understand the need to recoup costs and keep escalating.

Okay. Got it. And then last one for me, just what's your crystal ball coming on OCC pricing for the balance of the year?

As long as you're alive, this is worth absolutely nothing. I expect it to trend up a little bit, maybe go up one more time during the summer and then flatten out and then start trending down. That would be my expectation. But it may -- if China comes back in the market in a big way, it could bump up in the fourth quarter, but I just don't believe that's the case from what I see with the Chinese economy right now. But again, that's worth absolutely nothing.

The next question comes from Phil Gresh from JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Just wanted to ask a couple of questions here. One is just on the emerging market expansion plan that you talked about a decent amount at the Analyst Day. In light of what we've been seeing out there with the slowing growth in emerging markets, do you feel any differently about that than you did 6 to 9 months ago?

Well, not really because it's product line specific. Our emerging market look is to expand our capability right now in flexibles, and we have a pull from our customers to be capable in these emerging market areas. So that's a big part of it. Now I would tell you, tube and core opportunities, as well as composite can opportunities in emerging markets are really, for us, are somewhat customer-driven now. So that's not changing, so we're still looking for those opportunities. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. Got it. And then on Protective, I was just hoping you could give a little bit more color around the Alloyd situation? Obviously, you talked about how that's a drag, but exactly, what's going on? And time to resolution of any particular issues if they're operating or what have you?

Yes. I think that as we've said from the very beginning, right after we -- or right before we acquired that business, they lost a significant piece of business that was impactful to them. But -- and we need to regain new business and new volume. We recently put in some very talented people in the organization, on the sales and marketing and engineering side. They've now come up to speed. We're beginning to see some increased volumes coming into that business, which is exactly what we need. In addition, we continue to work very closely with our Display and Packaging business because we do a lot of Alloyd work. We actually do a lot of ceiling on Alloyd machines and use a lot of blister. We're now being able to sell the blister, as well as seal the blister to the Alloyd business. So as that continues to ramp up, those are the things we're looking for. I suspect that it's going to take us through the balance of this year to continue to grow that volume. But I expect it to grow incrementally as we continue to go through the balance of the year and then be in a position next year to begin some positive contribution. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then last question is just on the price/cost on the industrial side in the second half of the year, the announced -- some of these announced price increases have been out there for a little while, I guess -- so, I guess I would assume you would've gotten some traction on realization, as we progress into the third quarter, to offset some of these OCC headwinds which seem pretty modest, I mean, relative to the price that you guys are going after. So maybe just, if I'm wrong on that, let me know, but it seems like you should be able to be more neutral according to my math.

Well, we've got to look time point to time point. I would say that the price increases that we went after at the first of the year were really designed to recoup other costs that escalated over the years. And we have -- that was a good price recoup and kind of brought us back to where -- a more normalized level. The latest increase has now happened with OCC resetting at $1.20 [ph], and now it's jumped $10, so that's the one that's out there that would cause us to go price/cost negative as we look quarter-to-quarter, and that's what we're trying to overcome.

The next question comes from Mark Wilde from Deutsche Bank.

Just batting a little cleanup here. Just one other question I had in Protective, Jack. I think you've mentioned that temperature-safe business was down 4% in volume year-over-year. And I wondered if you could put a little color around that?

Yes. That business is -- it has a complete range of offering, from filled bags of water that people freeze all the way up to these very, very sophisticated temperature-controlled shippers. And it's really the temperature-controlled shippers that have the best margins and the one where we're concentrating our effort. As we look at that, some of that volume and the more -- the lower-end product, the more simple product, if you will, is down somewhat year-over-year. So that's really what's driving that. Now, again, that tends to be offset as we go into the flu season, which is now, which we expect some improvement.

All right. And the other pieces of business there, the higher-end stuff, how is the volume there?

Fine. What we've expected it to be. Again, they're a little bit behind in the flu season, as far as their -- when they begin to build. But what they're now saying to us is that because of the rain and the extended rain, they expect a longer flu season and a more intense flu season. So we expect some significant volume recovery.

Yes. How much would you expect, just over time, Jack, that the growth rate in that Protective business look like?

The entire Protective business, as we've said, is going to grow at somewhere in that 4% to 5% range over a 5-year horizon. That's -- all the data that we have would suggest that.

Okay. And the other area I wanted to just follow up on is the Display business. It sounded like you're starting to see kind of seasonal pickup, which I assume is stuff that's tied to kind of back-to-school and even looking out toward the holidays. Are you seeing anything that's kind of stronger than normal in that pickup right now? I mean, does it really tell us anything about kind of promotional activity over the next 6 months by the consumer products companies?

Well, certainly there is some seasonal pickup, which will be normal this time of year. There's also some volume gains that we're seeing. But there is also an increase in what we'd call baselevel activity, greater promotional activity across a larger number of customers. So that tells us that general activity is moving upward.

The next question comes from Chris Manuel from Wells Fargo.

Just a couple quick follow-up questions. If I can actually go back for a second to a question, I think, George asked to kick things off. In the Industrial and Paper segment, when I look at kind of the performance there, even if I go back and I put almost all of the higher pension from your bridge year-over-year in that segment, profits are -- would be essentially then flat. And I look at what you talked about there, with having a little bit of productivity and having volume price be a little bit better. And in particular, volume up a touch, I would've anticipated the business to have done, as a whole, to have done a little better. Maybe could you have give us some color as to -- are there some pieces within there that are doing better or worse? I know you noted, in particular, just on the Paper side, you got your lowest cost per unit that you've had in a long, long time. Maybe is it, if anything, in recycling or in some of the other operations that are offsetting that?

Well, I -- you're picking just to the Industrial businesses, not totally.

Well, I'm looking at Paper and Industrial Converted Products segment in particular.

Certainly, there is a global impact to that they have to factor in. The global picture is impacting that to a degree. As South America is down, of course, Europe is not as strong as it has been in past years. Also, domestically, I would tell you that the recycling business is being impacted by the lack of selling price for non-OCC product. The other products -- the other paper fiber that we recycle, ONP, et cetera, as well as plastics and other things, the pricing on those products is down somewhat, so that's impacting recycling, that's a part of that as well.

Okay. So as you move through the balance of this year, some of those things might not abate. But I mean, I recognize you got higher labor and some other elements that will continue. But I think, to an earlier point, productivity should kick in to the balance of this year that will help offset some of that? Would that be a fair way to think about it?

Yes.

Okay. That's helpful. Last question I had was new product funnel, something you usually talk with us about. Where you're at as you look today? What you anticipate over the balance of the year? And then customer activity and new product development, are you seeing -- how would you gauge it, vis-à-vis in the past, are you seeing customer is more receptive today to launching and bringing out new products, kind of a similar type level or even potentially a little worse? How would you gauge that?

Well, the new products funnel for the quarter is around $30 million. It typically runs $35 million, so it's in the ballpark of where we typically run. We're probably about at $65 million for the year right now or maybe a little bit higher. But that's in the range of normal. I will tell you, however, that as we talked about at the Analyst Day in December, we're changing our focus a little bit here, becoming more of a market-focused company and trying to define and develop wide-area solutions that cover multiple customers, not just single customers. And that's a big focus of what we're doing, trying to have insights with consumers, what consumers are interested in doing with packaging, and then driving that back across a larger number of customers versus single customers. And that's going to have a little bit of play into the new product funnel, perhaps in the short term. But I would tell you, longer term, it's going to have a bigger impact because you're going to be able to sell that product across multiple formats and multiple customers, if I explained that right.

The next question comes from Adam Josephson from KeyBanc.

Jack, to what would you attribute the strength you're experiencing in North American tubes and cores to? How much of it do you -- I know I ask you this every call, but how much do you think is tied to housing? Obviously the ISN data hasn't been indicating much expansion, but you're seeing this as stronger than you've seen it since, I think, mid-2010, you've said.

Yes, I -- and I'm going to answer the same way I've always answered it, Adam. I think it's a blend between just industrial manufacturing and housing. And I think housing being as strong as it is, is simply offsetting industrial manufacturing being a little bit weaker, and kind of keeping it somewhat flat, and that's what's happening. What I am hopeful of is that as we move into the third and fourth quarter, you're going to begin to see both of these indices move in the same direction, and that would drive some additional volume. I would like to see that.

And would -- can you tie your comment earlier about base level activity increasing in your Consumer business to that earlier discussion? Is that something -- how long have you been seeing this for? Were you expecting it going into the year?

Well, we've said all year we expected the consumer volumes to be the opposite of what they were in 2012. They started out strong and got weaker as the year went on. What we were hearing from our customers is that they're going to start out slow and get stronger as the year went on. That's playing out, more or less, like we expected. And I think that it's -- I would say it's kind of within the range of what our expectations were. We're not seeing the activity that says consumer volume is just going to jump off and be outstanding. We're saying, we're just going to see those incremental increases much along the lines -- I think we said 2%, year-over-year, up. And that's about what it feels like and what we expect it to be by the time it's all said and done. Maybe a little bit stronger, but that's kind of where we see it.

That's helpful. And just 2 others, one on composite cans, Jack. You've talked about Tegrant being better in nuts, dough, et cetera. Is that because prices fell from last year in nuts, specifically? Or is there something else going on?

Well, I certainly think that Kraft, last year, was involved, it was a very large customer, I was involved in the split of their company. And several of their commodities or some of their products suffered because of that. And they're now beginning promotional activities, and I think that's a part of this rebound. I'd also have to think that the following commodity prices are having a positive impact on CPGs, and that's somehow manifesting itself at the cashiers -- cash out line as form of perhaps lower prices or promotions. So I think a bit of all that is playing into those types of increases.

That's helpful, Jack. And just one last one on capital allocation. Past this year, how do you plan to allocate free cash in excess of dividends? In terms of the relative attractiveness of reinvestment in the business, acquisition and buybacks in light of the current share price and any other factors.

Well, I think a bit pretty consistent here is that we have now looked at the portfolio. The portfolio is wide enough, we want to optimize it across all these businesses. That means something different for every business. We have businesses we want to grow. So if opportunities come up, we're going to use cash flow and the debt in our balance sheet to grow those businesses as the opportunities present themselves. Absent that, we're going to look at ways to maximize cash -- maximize returns for our shareholders, that is inclusive of share buyback. We continue to work toward kind of a more consistent plan, and as we get closer, we'll be talking about that more toward the end of the year.

The next question comes from Al Kabili from Macquarie.

Just 2 quick ones for me. On Brazil and China, Jack, could you just, if I missed it, help us quantify what your volumes were in those regions and the trend throughout the quarter?

I can. Well, I can't do China, specifically, I can do Asia, and this is primarily industrial. For Latin America, volumes were down 2.7% on a volume basis for the tube and core business, so that kind of gives you an idea. In Asia, they were actually up, but that's going to be driven by the Thailand resurgence in volume. I would say China was at least flat to down in this quarter. That's all tubes and cores related.

Okay. And the trend through the quarter, was that relatively that stable and the numbers you just gave are deteriorating, getting better? And what are you seeing early on in the third quarter there?

In those 2 markets?

Yes.

Well, I would tell you that Brazil was kind of a slightly descending trend. It is weakening a bit as we go. China is probably more flattish, on hold.

Okay. And then just the second question is just on the blow-molding operational issues you're experiencing now. And I know you mentioned it's going to take a little time for Rob and the rest to get it back up to where you want it. But can you just help us with how much of a drag that is? And once you kind of get that more normalized, what kind of upside that might represent to your Consumer business?

Well, I could tell you that as we looked at blow molding, specifically, and the issues that happened in blow molding, I would say it was perhaps as much as $0.025 the issues that we had in blow molding actually cost us. So once we get them behind us, it could be a positive.

There are no more questions. I'd like to turn the call back to Mr. Roger Schrum.

Well, thank you, Stephanie. I do want to let everyone know that Sonoco will release its annual Corporate Responsibility Report on Monday, July 22. The 16-page report provides an update on the company's efforts to improve economic sustainability, environmental stewardship and social responsibility. Copies of the report can be downloaded from our website, sonoco.com. Also, we expect to conduct our third quarter earnings conference call on Thursday, October 17, 2013, at 11 a.m. Eastern Time. More details regarding the call and the timing of the release of Sonoco's third quarter financial results will be communicated several weeks prior to the call. Let me again thank everyone for joining us today, and we certainly appreciate your interest in the company. And as always, if you have any further questions, please don't hesitate to contact us. Thank you again.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and enjoy the rest of your day.