Sonoco Products Company (NYSE:SON) Q3 2023 Earnings Call Transcript

For next year, it’s really early days. We are really managing inventory really aggressively and have been, and we’re managing AR and AP really aggressively as well. We feel like we’re at the right level of of days at this point and don’t feel like we need to be too aggressive in pulling inventories down any further in the businesses, especially as some businesses are expecting growth next year. So I think the days, the metrics for working capital will stay constant next year, and would be the guidance we would give on working capital in 2024.

Unidentified Analyst: Okay. Can you just remind me again or remind us again what portion of COGS is labor?

Robert Coker: Portion of the COGS? Can you say that again, Gabe? You’re breaking up just a little bit.

Unidentified Analyst: Sorry. Can you just remind us again what portion of COGS labor? And I guess, how should we kind of think about the mid-single-digit labor inflation next year? Do you have anything in your contracts to kind of pass this through to your customers through price increases.

Robert Coker: We do have the opportunity to pass on labor, but we’re having to carry it until those until the timing of price adjustment coming into place, typically quarterly. But certainly, labor inflation is continuing to roll over through this year and then early next year. So it will be a timing issue with the customers.

Unidentified Analyst: Okay. And sorry, lastly, just what portion of COGS is labor?

Robert Dillard: It varies by business. I mean, I’d say that in some businesses, it’s in the 10% to 20% range most of the COGS is really material. And there’s a component of that, that certainly fits. But it’s definitely less than 25% in every business and in some businesses, it’s really in the single digits.

Operator: Okay. And I would now like to turn the conference back to Lisa Weeks for closing remarks.

Lisa Weeks: Thank you for joining us today. If you have any follow-ups, we’ll be around after the call to answer your questions or please feel free to contact me to schedule a follow-up. We look forward to seeing you on the road at our planned conferences and events in the coming weeks, and we will look forward to reporting our fourth quarter and full year results on February 15, 2024. 1 week later, we will be having our Investor and Analyst Day on February 22, 2024 in New York, as Howard referenced. This will be an in-person event, and a webcast will also be available. Registration details for the in-person event as well as the webcast will be available on our website soon. And with that, we’ll close the call, and hope you all have a great day.

Operator: This concludes today’s call. Thank you for participating. You may now disconnect.