Good day, ladies and gentlemen, and welcome to the Sonoco First Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow that time. [Operator Instructions]. And as a reminder, this conference maybe recorded. I would now like to turn the conference over to Mr. Roger Schrum, Vice President of Investor Relations. Sir, you may begin.

Thank you, Sabrina. Good morning, everyone, and welcome to the Sonoco’s Investor Conference Call to discuss our 2018 first quarter financial result. Joining me today are Rob Tiede, President and Chief Executive Officer, Barry Saunders, Senior Vice President and Chief Financial Officer. A news release reporting our 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 be referencing a presentation on our first quarter results, which also was posted on our Investor Relations site this morning. Before we go further, let me remind you that today's call and 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. Furthermore, 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 of those measures to the most closely related GAAP measure, is also available in the Investor Relations section of our website. Now with that, let me turn it over to Barry.

Thank you, Roger. I'll begin on Slide 3, where you see that earlier this morning, we reported first quarter earnings per share on a GAAP basis of $0.73 and base earnings of $0.74, which is at the high end of our guidance range of $0.69 to $0.75 all of which compares to base earnings of $0.59 for the same period last year. The differences between GAAP and base earnings are discussed in our press release, but are not very significant this quarter. So looking briefly at our base income statement on Slide 4. The first thing, I want to point out, is that due to the implementation of the new Accounting Standards we will now be presenting the non-service components of pension costs in a separate line below operating income. For those of you familiar with the technicalities of pension accounting for defined benefit plans, those non-service cost would be interest costs on the pension obligation, amortization of actuarial gains and losses, all that netted against the assumed return on pension plan aspect. As you see here the amount of such non-service costs nets to essentially nothing this year, actually income of 291,000, but represent a cost of $3.7 million in 2017. You might recall that we were expecting pension expense to be lower this year and it is in the non-service components, due to the strong asset performance last year, as well as the impact of the voluntary contribution we made in October. Also I will mention that for your convenience we are providing recast in 2017 financial statements to reflect this new format in both an 8-K that will be filed today and will be available on our website. So starting back with the top line of the income statement. You see sales $1,304 billion, up $132 million…

Thanks, Barry and good morning. Let me give you my take on the first quarter, then speak about our recently completed acquisition of Highland Packaging and conclude with a review of our opportunities and challenges for the rest of 2018. I can tell you, I was pleased by our team's efforts in the first quarter, as we achieved record first quarter results with our top line and our bottom line growing double-digits. This was the third consecutive quarter Sonoco has achieved record base earnings results, which I believe clearly demonstrates the strength of our balanced portfolio of consumer and industrial related businesses. Our Consumer Packaging segment grew sales double-digits, primarily due to acquisitions and our operating profit grew just over 4%. Margins were somewhat compressed during the quarter due to higher operating and logistics costs. Material inflation particularly resin and a negative mix of business. However we do expect margins to improve as the year progresses. As an example are new flexible packaging acquisition, Clear Lam was experiencing a slower seasonal period of the year and the fresh berry harvest was delayed due to colder weather than normal. Growers are telling us that the harvest will be strong in the second quarter and overall the season looks good. In addition, resin prices were up 10% to 15% year-over-year in the quarter and some of the increase going into the second quarter. We have increased prices to contractual pass through mechanisms and by direct price increases. So while we're somewhat behind the price cost curve we fully expect to catch up later in the year. Switching to our global Paper and Industrial converting segment, we reported our strongest first quarter in 10 years with operating profit rising 48% and operating margins improving 250 basis points. We had a strong operating performance…

Thank you. [Operator Instructions] And our first question will come from the line of George Staphos with Bank of America Merrill Lynch. Your line is now open.

Everyone, good morning. Thanks for all the details. Barry, congratulations to on your hero award presentation tonight. Hope it goes well. I have two questions, one broadly on consumer and then one just on OCC and effectively what's in your guidance. So on consumer, can you help us understand how well you believe you're getting traction on what's been the last several years’ worth of efforts on innovation, more customer centric product innovation, the new product development center that you have in Hartsville, relative to the volume numbers that you saw. And kind of the related question there. What's been going on such that mix was somewhat negative? I'm guessing its just composite cans were down, but was there anything else going on in terms of the mix that's broadly question one. Question two. Is your expectation of OCC being down again in May in your 2Q guidance? So what's the number, if not, could you correct that? Thank you, guys.

Thanks, George. Yeah, with respect to the innovation inside consumer, if I remember this correctly, we've got - last year we had about $44 million of new products that were driven through the innovation center and we’re projecting that to be directionally about $65 million for 2018. And so the other measure that we look at is simply the number of customers visits and that continues to surprise us, but not really anymore because we do - we just have a lot of customers coming down with some challenges that they're asking us to participate with them and help them figure out how to win both around the perimeter, but also more importantly into the center store. And then on the mix question that you had asked. Yes cans globally were strong. However in North America cans were down and it was the normal set of culprit's. There would be refrigerated though, the powdered beverage, and concentrate, I am sorry, our frozen concentrate. The rest of the business performed as we expected. And in terms of the expectations we also had one less day in the quarter and I think Barry referenced that and saying that was directly above a 1% impact. But it's pretty hard to identify specifically what shipments will happen on one day. As it relates to your question OCC, the guidance does reflect the expectation of that drop of $5 to $10 in the month of May.

Okay. And Rob if I could just to clarify from the prior answer, so the mix effect that was negative, if I'm remembering correctly, that is largely being attributed to composite cans being down in North America, and then relating all of the growth in visits and the innovation center revenue generation. You're happy with the traction you're getting from those relative to the way it's translating to the volume growth. I guess, you said the 2% in plastics and the 1% in flexibles are correct on both of those? Thank you.

Yes.

Okay. Thank you.

Thank you. And our next question will come from the line of Edlain Rodriguez with UBS. Your line is now open.

Thank you. So on big picture question, I mean, can you talk a little more about, like what you see in terms of the mix in the portfolio, the changes that you're making in terms of shifting to higher growth plastics and how that should eventually improve the mix of the portfolio? And also can you talk about like the pipeline for the types of bolt-on acquisitions you're focusing on?

Sure, Edlain. Let me talk to the plastic acquisitions that we've made is really a shift to the perimeter of the store which is where – where w we've seen a fundamental shift occur in terms of how people eat. And so our focus is around - basically is around what we call fresh and natural, but it's about just fresh and natural foods. It's about how can we come alongside the growers, how do we provide not only thermoformed constructs, but how do we also bring alongside some flexible capabilities that really give our customers a lot more optionality, and it's about preserving shelf life. So we've seen growth, I think I'm right on this, it's probably in the range of 6% to 9% growth on the perimeter of the store in comparison to what we've traditionally seen and where we grew up in the middle of the store.

And in terms of the pipeline?

I am sorry.

Yeah, I would say - let me answer it this way, I mean, look what we've always said is our focus is for us to put disproportionate amount of dollars towards flexible packaging or thermoformed and expand where it makes good sense for us, on the industrial side, specifically in the emerging markets. So our activity in the M&A space is as robust as it's ever been.

And one last one, like looking at the margin profile on Display and Packaging, like how core is that business for you and if it is, like how long are you willing to wait to see your turnaround in there?

Yeah, let me answer that question in this way, that business needs to be fixed and we've talked about that. We've got a significant tax center that we were starting up that went from zero to a hundred in sixty days and we brought in 600 people. We had to train them up. We brought in new lines and we will continue to bring in lines into that facility probably through the beginning of the third quarter. But we've seen significant sequential improvement. You saw us go from a loss of $4 million to income of about $1.6 [ph]. We still have a long ways to go. Our focus right now is fixing that business.

Okay. Thank you very much.

Thank you. And the next question will come from the line of Adam Josephson from KeyBanc. Your line is now open.

Rob, Barry, Roger, good morning.

Morning.

Morning.

Rob, I hope you're feeling okay.

Yes. No allergies are killing me.

All right. Well, all the best of luck to you in your new role. Three unrelated questions, one on M&A, I know, you just asked a little bit about that. What do you consider your optimal leverage ratio and what is your willingness to go up significantly given where we are in the cycle for a major transaction?

Well, I’ll answer it this way. We've always said that we want to maintain investment grade but for the right transaction. First of all it's got to fit through the strategic lens, for the right transaction, would we go outside that as long as - the answer's yes, as long as we have a very clear path within a prescribed timeframe to deleverage and get us back into investment grade ratings. So it really would depend on the deal and what all pertains to it. And then as well there's other options with respect to if the right deal were there to supplement that leverage.

Sure. Thank you for that. One the obligatory OCC one for me. I think you said down another 5 or 10 in May, we know where we – we’re decade low prices already. Are you - do you have any solid views to where we are here, is there - do you subscribe to this lower for longer view that just because of China's ever tightening standards somehow they'll be able to supply themselves with fiber [ph] or longer time and they won't need the amount OCC that they have historically. It's such a confusing issue as to how they're supplying themselves with the necessary fiber, I just hoping you could opine a little bit on that?

Yeah, that's a great question. It's lower for longer. First of all, what does longer mean? I think the last time that I gave a [indiscernible] OCC was going, I think I was wrong the next day. But here's what we do believe to be true. We do believe that it's going to - I believe it's going to go down at least that $5 to $10 - excuse me, and then we do expect to see some upward movement typically in Q3, will it be significant? I don't know that will be significant. I think the next release of the import permits comes in June. So I do expect to see some form of increase starting in July, leaving out that way. But as I think about China in totality, I think about the first of those new machines that are going in and the magnitude of input that has to go in there. I've got to believe that over a period of time we're going to see them come back into the marketplace. I just - I can't get my head wrapped around how they're not going to do that.

Sure. And to get any easier [ph] on resin, their widespread expectations as you're aware of that polyethylene is going down and if not April then shortly thereafter, just given the significant PE capacity that’s coming on this year. What is embedded in your guidance along those lines? And forgive me if I missed this earlier. But are you of the belief that there will be a significant decline in PE prices in the next few months?

Yeah, I would tell you - let me answer the thought on PE, do I believe it will come down? I think the answer is yes for the reasons you just describe it, but a lot of that capacity is been building or has been built and was planned to be built for the export market. And I think what's going to come into play on this is what the tariffs will ultimately and how they will come into play with China and will we find ourselves somewhat awash in polyethylene and what grades. So I do expect it to come down slightly to being flat. And that's really what we built into our forward look, we saw a slight decrease and then really a flattening out.

Just last one on consumer Rob, did you - forgive me if I again I missed this, was the result below your expectation for a particular reason. If indeed it was below your expectation in the quarter?

Yeah. Let me answer it this way Adam. If the - the one thing that stood out in consumer for me was we knew that we were chasing resin and the other big cost factor was freight. But the other play here was I did expect or maybe said hope is not a strategy, but I was - I was expecting that we would be shipping more fresh produce packaging out in the quarter, we're now seeing it really roll out into the second quarter. That was weather related and then the other one is on the - and we knew that Q1 for Clear Lam is a slower quarter for them and I’d expected some of the synergies that we had put in place, excuse me, identify that they would have accelerated through in the first quarter. What I do you think will happen is some of that will leak into the latter part of the year and into early 2019. Clearly identified will happen. I think it was a timing related issue.

Thanks so much. And hope you feel better soon.

Thank you.

Thank you. And the next question will come from the line of Ghansham Panjabi with Baird. Your line is now open.

Hey, guys. Good morning. First off, congrats Barry and Rob also I hope if you feel better soon.

Thank you.

Thanks.

I guess first off, you know, on paper you pointed towards a better environment as it relates to your success in pricing. Can you maybe expand on those comments as relates to what exactly is going on in the U.S. and Europe. And then also given the pricing in lower OCC, will price cost be a bigger year-over-year variance for 2Q on a year-over-year basis for that segment?

Yes. So I would tell you that our mall system is full in the U.S. Our mill system is full in Europe and right now we don't see that letting up. And so that's quite frankly what's driving our bullishness.

And the 2Q variance year-over-year to that segment…

In terms of the year-over-year variance, I don't think you would expect quite as much variance because again on a year-over-year basis last prices resetting and the cost going up, while this year in the first quarter we had prices resetting at a higher level being going down. And you don't see that same magnitude of variance when you look at the second quarter last year versus this year.

Okay. And then just kind of going back to consumer, I know you've kind of touched on this qualitatively, but how should we think about margins themselves progressing as the year unfolds. You know, obviously there's a lot of complications with freight. Oil has moved up quite a bit recently and that could put some pressure on your cost base as well. But how should we think of that baseline for operating margins for that segment as the year unfolds?

I think what we've always said is our expectation was consumer in its natural state was going to be somewhere between 10% and 11%. Overall, I would expect to see us obviously recover the resin that we've been chasing over the balance of the year and then it really comes down to you know, with the volume ultimately is going to be through our customer base. But I would expect us to be in that 10% to 11% range.

Okay. And just one final one on Protective and the weakness in autos, which has continued for many quarters now. Are there any adjacent markets that you can deploy some of those assets towards, I am just trying to figure out what the strategies put that to offset what seems to be a shift in the market away from you?

Yeah, I mean, yes, there are some submarkets that you can participate and utilize your equipment. I think clearly the answer is yes. But what we've said is we need to get our arms wrapped around that portion of the business and assess what the long-term prognosis of the automotive space is for us. So we’ve been pretty crystal clear with respect to that.

Okay. Thank you.

Thank you. And the next question will come from the line of Chip Dillon with Vertical Research. Your line is now open.

Yes. Good morning. And I just want to point out, I think that Charlie preceded Barry, and congratulations Barry. But I think it took a North Carolina guy to hopefully smooth the path for your - for your time as CFO which has certainly gone very well, so congratulations.

Thank you very much.

Anyway, I had to stick that in there. My first question has to do with the - I guess this to home in on the paper and industrial converting. I know there is been some ups and downs with the corrugated media machine and I just didn't know if you could update us as we think about ‘18 versus ’17, it would seem, I am assuming you do some recycled fiber, I think its semi chemical there. And with prices up and at least with so far OCC down at least through mid-year, I would expect that, you know, that could be a material factor at least in the first half, in terms of year-over-year improvement. I mean, could that be a number that's in the millions of dollars, pennies per share, per quarter at least for the first half, maybe even into the third quarter?

Rogers here with me, why don’t I turn it over to you.

Thanks, Rob. Chip, it's obviously the situation on number 10 [ph] is much better year-over-year. What we saw in this quarter was about $4 million improvement on that machine. So as you said, the semi can [ph] uses some OCC pricing is firm and then we've got the next $50 growing in the next month or so. So it would fit to that.

Is there any prospect of getting a long-term off-take agreement for that machine? Does that look like a possibility at this point or is that not something you're seeking?

It is something we're seeking. It is something that we've been working very diligently on.

Okay. Got you. And then next question. Well actually I think on the OCC thing, you were mentioning how you think it tightens in the second half. I guess, you have an eye on the fact that in China the price there is five times where it is everywhere else. So it would seem like something's got to give there. But when we look at the you know, the M&A footprint, I know you talked about this and your goal to stay investment grade, Rob but if you think about the portfolio is there - are we likely to see some businesses possibly divested in the next two to three years as you - you know, assess the portfolio. I know from time to time the company has gotten out of certain things. Are you totally happy with where you said with the portfolio? And you know, you might not want to name names or could there be some divestitures in the future, especially if it helps you get bigger and things you want to get bigger in?

Chip. Let me answer the question this way, because I play hockey growing up with three periods and as I think about our overall look and where we as a company want to be, we're probably at the end of the first period, going into the first intermission. I'm not trying to be coy, but part of what we talked about is we said where we want to invest in flexibles and thermoforming and where it makes good sense for us to broaden our footprint, probably in field [ph] side, especially in the emerging markets that's where our disproportionate focus will be and we’ll pursue those opportunities and if required then we'll have to look at other things in terms of how to finance that.

Okay, great. And then the last quick one for Barry. Just on the accounting change for pension, you mentioned how it actually had a small - you would have looked a little bit better if you had made the change, at least in the segments, because of the way you actually made some money in the first quarter. But as you think about the year as a whole and next year, is there a noticeable impact that you would anticipate based on where interest rates are et cetera?

Well, certainly again, pension expenses very hard to predict because of all the impacts of asset returns and interest rate on them and so forth. So we haven't even started to provide any update on where we think that could possibly move in 2019. But it is true that and fair to say that most of the volatility from pension expense does in fact come from the non-service component. So it will now be all isolated for you below operating profit.

Okay. Got you. All right. Well, thanks again for all the details.

Thank you. The next question will come from the line of Scott Gaffner with Barclays. Your line is now open.

Thanks. Good morning.

Good morning.

When I look at the full year earnings guidance rate excluding the acquisition and the change in the tax rate relatively unchanged, it feels like maybe price cost is a little bit better and volumes are a little bit weaker. Would you say that's the case, how you're thinking about the year now?

Yes, it may maybe for the first quarter, we saw the volumes were a little lighter. Again, remember, one less day and then - I'm sorry Scott just – I am having trouble hearing so, just tell me what the other question was around.

Sure, Just it feels like price cost, it feels like price cost is better for the year and volumes are weaker for the year. Just on the….

Yeah, I'm not sure that the volumes are weaker for the year at all. And price cost has been positive and it's very reference, we'll see some more of that in Q2. But in light - in terms of where we're going and what we've laid out in terms of the increase, it's really driven by as Barry said earlier, it's around tax and the accretion of Highland and it's still very early in the year for us to get ahead of our skis.

Okay. So are you saying you still think you can grow volumes in 2018 at about a 2% rate?

That is what I am saying.

Okay. And then when we think about from a free cash flow perspective and a working capital perspective, the decline in OCC are there any significant benefits from a decline in OCC for – on the working capital line?

We certainly would have seen some of that in the first quarter with the lower pricing and that was one of the reasons we didn't see any more of an increase in working capital than we did with the increased activity that I previously mentioned and some of the seasonality of the acquisitions which added to work year-over-year. So we did see some of the recovery that we talked about last year as one of the thing - one of the reasons that it was going up some.

Okay. Thanks, Barry. Thanks, Rob. I appreciate it.

Thank you.

Thank you. And the next question will come from the line of Mark Wilde with BMO Capital Markets. Your line is now open.

Good morning, Rob. Good morning, Barry. Good morning, Roger.

Morning.

Good to see if I am going to get us back on that one question guideline. Rob, I wondered if you guys could just talk a little bit about what you’re seeing in terms of changes that are going on in the recycling markets right now in response to these Chinese export markets. And what changes you guys might be making in particular?

The changes in terms of the recycling markets that we're seeing, if I think about our plastics business, clearly we are a significant user of our path. If I think about what we’re doing in terms of our recycling business, specifically were making investments to help clean if you will the loose paper. We’re making investments in our mills system, so that we can take advantage of more loose paper. So that’s really the focus that we’ve got and then on the plastic side, the angst that I always have as margins are fairly thin in these businesses and these guys just want to make sure that they’re financially stable. So we’re monitoring that closely.

Okay. And are you seeing a lot of recyclables actually just end up in landfills these days, because people in the market are not?

Right now it's pretty moderate in terms of change that we've seen or at least that I've seen.

Okay, great. I'll turn it over.

Thank you. And the next question will come from the line of Brian Maguire with Goldman Sachs. Your line is now open.

Hey. Good morning, guys.

Morning.

I was hoping to come back to Scott's question on the guidance. I guess, you know $0.06 [ph] raise is explained by the taxes on the acquisition and I think you’re saying volumes to be fairly consistent. It sounds like OCC is maybe a good guy versus the original view. Just wondering what the offsets are there. And I guess I heard freight and logistics from a couple times, just wondered if you could maybe dial in on that one and if there are any other offsets you’re seeing in AO [ph] and others headwinds getting worse or are they sort of flatten out versus where you were in 1Q?

Yeah, I certainly think the point you're making about other non- material inflation is I believe one of the most relevant when you look at freight we talked about the fact, we did have some offset from resin in the first quarter. So those would be really some of the bigger drivers of the offset or maybe the more favorable pure price material cost change.

And just the recent trend in those costs, are they – I mean, resin we can we can sort of track, but his freight do you think we sort of reached a plateau there or are you still seeing those rates kind of rise even here in April?

And so I’d say pretty much plateaued at this point of course. They're up about 14% year-over-year when we look across the blended basket. So it is pretty significant. But we're not expecting those to change dramatically going forward.

Okay. And then just switching gears, Ron, I think a couple of times you mentioned, it sounds like more just weather related issues at Clear Lam and you expect to get back on track there. But just wondered in general if you could kind of comment how the recent acquisitions have been performing and the integration success you’ve been having and just kind of overall how pleased have you been with their performance. And does that give you any more or less confidence to try and handle more deals going forward or are you pretty much kind of on track with what you expected?

I would tell you that the acquisitions performed as we expected through 2017. And quite frankly the operational activity in Peninsula, notwithstanding the weather was on track with what we had expected. The one and in terms of the integration process that has been going fairly well. With respect to Clear Lam, Clear Lam was less impacted by whether, it's just Q1 is their slowest time of year and it's a fairly significant ramp up once it goes into Q2 and Q3. And that's just a function of time of year as well. They did have a strong fourth quarter building ahead for a customers product launch. So I think that also came into play in our first quarter and that should be back into a normal sequence of events as we start into the second quarter. Well let me rephrase, it is back into the normal sequence of events as we've gotten into the second quarter. So I am pleased with the way the teams work together. I think we've got a good process in terms of how we integrate these deals. We've been evolving that over the course of the last number of years. So I'm very comfortable with our folks being able to bring acquisitions into the full.

Okay. Just one last one for Barry. The higher basis point kind of the booked tax rate, does that also flow through cashes or are you expecting roughly the same cash tax rate as before?

No, we would expect that flow-through cash flow as well. So what that change to our investment we would expect to be pushing towards upper end of the range in the cash flow guidance that we provided.

Okay. Thanks very much.

Thank you. And the next question comes from the line of Gabe Hodge [ph] with Wells Fargo Securities. Your line is now open.

Good morning, gentlemen. Congratulations on a [indiscernible] to the year. Just couple questions. And I think Rob you mentioned making some investments to incorporate more loose paper, really I guess the question is, can you give us a timeline on something like that. I mean is this more exploratory at this point or doing some preliminary engineering work or are you guys putting wrenches on machines to make it happen? And then if there's any way to sort of quantify whether it's from you know, incremental investment or true EBITDA that you might expect to see out of that type of exercise. And then I guess sort of third, would that be lumped into normal ongoing productivity type initiatives to offset non-material inflation or something that we would kind of count on as being above and beyond, if that makes sense?

Sure. So let me try to run these all together. What we've done is we've made a strategic decision to invest $60 million to $70 million into our mill system. So the wrenches are already touching equipment, but it's going to be - if I look at this from a holistic standpoint this is going to be a three year journey as we go through the paper mill system here in North America, excuse me. And so it's investing in our best-in-class machines. It's really use - how do we optimize our mill system and how do we - how do we bring in lower cost materials along the way. Our expectation with all of this is said and done over the course of the next three years is we should see improvement somewhere in the 200 to 250 basis points in our paper system. And so our expectation is that, that should generate somewhere in the range of $25 billion of EBITDA improvement over the next three years.

It's all the point. The last thing, I'd ask you about would be sort of our thoughts on looking at scanner data and you know some folks have pointed to the timing of Easter, as well as maybe some stock ups in and around some weather related events in the first quarter. Can you comment at all, it sounded like you know the acquired businesses are sort of performing a little bit better in the volume front here in early April, but maybe more specifically the composite can business, just thoughts, expectations around volume trajectory there early in April?

What we have seen in terms of just general volume, it's consistent with what we were seeing in the first quarter. So that I would tell you that's not a bad thing because we have seen a slight rebound in some of the U.S. packaged food companies. We started to see that in the fourth quarter. We saw a little bit of that in the first quarter. So that's our experience as of right now.

Thank you. Good luck.

Thank you.

Thank you. And the next question will come from the line of Steve Chercover with D.A. Davidson. Your line is now open.

Thank you. Good morning, everyone.

Morning.

So I understand, applaud your efforts to grow around the perimeter of the supermarket. Maybe this is a West Coast perspective, but I'm getting concerned about the amount of plastic in my life. So what would happen if consumers shunned plastic? And I think you said that PET is sustainable, maybe you can elaborate on that.

It's a fully recyclable material. So when you think the product that we're putting fresh produce and is 100% recycled. Does that answer your question?

Yeah. That answers the sustainable, assuming people cycle properly. But what happens if there's more of a backlash against plastics...

Yeah, I don't need to the change the narrative here, but I think that clearly sustainability and re-cyclability is incredibly important. At the end of the day I absolutely believe flexibles, the plastic constructs have a great sustainability story and I do believe that we're going to see recycling technology be able to take multi-layer films and pull those apart. That technology is under way. I think the more relevant question that needs to be asked as we're talking about this is around food waste and how do we reduce food waste. Because when you think about where is the big issue, the big issue is 70% of all fresh water that's consumed goes into agriculture, 30% of all energy goes into agriculture and yet we waste incredible amounts of food between field and us as consumers. And I think that the plastics industry needs to tell this story. I absolutely believe that a lot of what we're seeing is emotionally charged, is not necessarily fairly presented. But at the end of the day if we're wasting, I think the number in the U.S. is a $168 billion of food a year. That is morally wrong. And as we think about it here at Sonoco we want to find a way to help to help solve this problem and that is around providing solutions to provide further shelf life to food not only here in North America, but help around the world. And I think that's part of the story that needs to be told. It's not the solution but it's definitely part of the solution and that's how we look at it. The issues that we're seeing in Europe, will they play out here in North America? Of course. But I think we as an industry need to make sure that we're also making sure everybody understands the benefits associated with these materials because you can't wrap something in paper and hope that it's going to stay - you know maintain its shelf life for 30 days or 60 days.

Fair enough. No I mean, that's a very valid point about food waste. All right, well best of luck in your new role from a fellow hockey player.

Thank you.

Thank you, Steve. Operator?

[Operator Instructions] And our next question will come from the line of George Staphos with Bank of America Merrill Lynch. Your line is now open.

Thanks. I just want to come back to the topic that Steve had tabled, relative to plastics in a narrative, Rob and we've talked about this with you at our conference not too long ago. And a lot of the issues perception, right. So from what you're saying and frankly given your role as a leading plastic packaging company, what are you doing and what do you think the industry is doing next to change that narrative because yes, you're quite right, you can't wrap everything in paper assume it will stay fresh, but if the consumer doesn't care or doesn't understand that then it doesn't really matter what the reality is relative to the perception, so how is the industry broadly from what you can see begin to change that narrative? And I had a follow up.

Sure. Great question, George. I do think that the industry is starting to come together through various associations where I think about the Flexible Packaging Association now starting to talk with some other associations to say how do we come together as one voice. We're clearly seeing it from other companies. Barry, comes to mind in terms of how they've gone out and talked about being plastic ambassadors. So I think that that voice is starting to gain some momentum and we're going to have to come together in that fashion. It's going to require some money to get that narrative out there and make sure that we're educating people appropriately and taking away some of just the emotionally charged visuals that we all see. Let me give you a visual, when I think of food waste the 800 million people out there not waking up every day and not having the amount of caloric intake that they need to sustain life. And we're showing pictures of a bird with a bag on it. I'm not trying to be flippant here, but I think it's something that we need to really sit down and talk about and make sure that people really understand the value of plastic. And so coming back to what I said, I think that that momentum is starting inside the - starting with companies, but it's got to be more than companies and it can't just be us. It's got to be the petrochemical industry, the plastics industry in totality, it's got to be CPGs that need to come to the party on this as well.

Fair enough. My last one is just a two part question on volume. Can you talk about what you thought the weather effect was in the first quarter in terms of volume and consumer or maybe even more importantly earnings. And then tube and core volumes being down in North America, if I remember correctly. Help me understand how that played out in light of what's been obviously relatively good overall volume trends in some of the more important paper markets. I remember your relative market shares in some of the markets, but I thought you had improved on some of those as well over time. So with that I'll turn over and wish you good luck in the quarter.

Thanks, George. With respect to weather, let me answer the question this way. Weather and some of the non-material related costs that we incurred, that we were chasing, I think that cost us a couple of pennies in the quarters.

Okay.

With respect to the tube and core volume, if I think about it this way, half of that volume went away as a result of just paper mills going away, which we fully expected. The other half was what we - what we fully expected in terms of our optimization plan. And as we're doing that optimization plan, we also are very targeted with respect to markets and customers. And we did in fact see growth in the focused markets that we said we want to grow our tube and core volume.

All right. Thank you very much. Coming from a roller hockey player, a long time ago, anyway. See you later.

Take care.

Thank you. This does conclude the question-and-answer session today. I would like to turn the call back over to Mr. Roger Schrum for further remarks.

Thank you again, Sabrina. Let me again thank you for those of you who joined us today. We appreciate your interest in the company. As always if you have any further questions, please don't hesitate to contact us. That concludes the call.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.