SONOCO PRODUCTS CO
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
SON$50.43-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000091767-24-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000091767-24-000048
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 182 previous paragraphs and 240 current paragraphs.
125 unchanged; 41 reworded; 63 added; 16 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 10 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (63)
Current report
•the Company’s proposed acquisition of Eviosys, including the satisfaction of conditions precedent thereto and the anticipated timing and financing thereof, and the anticipated benefits of the acquisition, including with respect to market leadership, strategic alignment, customer relationships, sustainability, innovation and cost synergies;
Current report
•ability to satisfy closing conditions and close acquisitions, including the pending acquisition of Eviosys, and to finance such acquisitions on acceptable terms;
Current report
•ability to receive regulatory approvals for the pending acquisition of Eviosys in a timely manner;
Current report
•the potential impact of the consummation of newly acquired businesses, including Eviosys, on relationships with clients and other third parties;
Current report
Sonoco’s portfolio transformation strategy also includes significant divestitures. In April 2024, Sonoco completed the divestiture of Protexic, which manufactured molded expanded polypropylene and expanded polystyrene foam components serving the automotive, electronics, appliances, and other markets. In 2023, the Company completed the divestitures of its U.S. and Mexico Bulksak businesses, which consisted of the manufacture and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners, and its S3 business, which provided customized waste and recycling management programs. The Company believes that these and other potential divestitures will enable greater strategic clarity and operational focus while also generating proceeds to fund deleveraging and capital investments in core businesses.
Current report
Second Quarter 2024 Compared with Second Quarter 2023
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $16,074, the Industrial Paper Packaging segment of $6,231, and the All Other group of businesses of $206.
Current report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $11,163, the Industrial Paper Packaging segment of $7,737, and the All Other group of businesses of $214.
Current report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $(462) and the Industrial Paper Packaging segment of $(956).
Current report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $177 and the Industrial Paper Packaging segment of $215.
Current report
5 Included in Corporate are gains from the divestiture of businesses including $(1,250) from the sale of the S3 business, part of the Industrial Paper Packaging segment, and $(3,228) from the sale of Protexic, part of the All Other group of businesses.
Current report
6 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(540), the Industrial Paper Packaging segment of $(2,278), and the All Other group of businesses of $(667).
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $15,987, the Industrial Paper Packaging segment of $2,565, and the All Other group of businesses of $1,987.
Current report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $4,015, the Industrial Paper Packaging segment of $1,987, and the All Other group of businesses of $865.
Current report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Industrial Paper Packaging segment of $(1,575).
Current report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $112 and the Industrial Paper Packaging segment of $60.
Current report
5 Included in Corporate is the gain from the sale of the Company’s U.S. BulkSak businesses, associated with the Industrial Paper Packaging segment, in the amount of $(7,371).
Current report
6 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(650), the Industrial Paper Packaging segment of $(2,835), and the All Other group of businesses of $(803).
Current report
Net sales for the second quarter of 2024 declined by $81.8 million or 4.8%, to $1.62 billion, compared to $1.71 billion in the same period last year. The decline was primarily driven by the absence of $44.9 million sales related to the Protexic divestiture in April 2024, the absence of $33.7 million sales related to the closure of a thermoformed food packaging plant in November 2023, lower sales of $22.5 million resulting from the accounting for the Company’s recycling operations as a procurement function effective January 1, 2024, and lower selling prices of $32.4 million. Overall volumes, including revenue from acquisitions, increased over the prior period.
Current report
GAAP net income attributable to Sonoco for thesecond quarter of 2024 decreased to $90.8 million, or $0.92 per diluted share, compared to $114.6 million, or $1.16 per diluted share, for the same period of 2023. This decrease was primarily due to higher quarter-over-quarter acquisition, integration and divestiture-related costs of $17.7 million and restructuring and asset impairment charges of $13.2 million as unfavorable price/cost was offset by higher productivity. Adjusted Earnings for the second quarter of 2024 were $126.8 million ($1.28 per diluted share), compared with $136.0 million ($1.38 per diluted share) for the same period in 2023.
Current report
GAAP operating profit for the second quarter of 2024 was $140.4 million, a decrease of 25.3% from the $187.9 million reported in the second quarter of 2023. The decrease in GAAP operating profit was primarily due to additional acquisition, integration and divestiture-related costs of $17.7 million, higher employee-related costs of $13.6 million and additional restructuring and asset impairment charges of $13.2 million as unfavorable price/cost was offset by higher productivity. Adjusted Operating Profit for the second quarter of 2024 was $193.0 million, a decrease of 8.5% from the $210.9 million reported for the same period in 2023.
Current report
Other income, net was $5.9 million in the second quarter of 2024, reflecting a gain upon the remeasurement to fair value of one of the Company’s investments in affiliates.
Current report
Non-operating pension costs were $0.8 million higher in the second quarter of 2024 compared to the second quarter of 2023, primarily attributable to higher settlement losses in Canada and higher year-over-year interest cost, partially offset by increased expected returns on assets. Additional information regarding costs of the Company’s retirement plans is provided in Note 12 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current report
Segment sales decreased approximately 4.5% compared to the corresponding prior year quarter due to the absence of $33.7 million in sales related to the closure of a thermoformed food packaging plant in November 2023, and lower pricing of $19.5 million, partially offset by a net $22.9 million increase in sales driven by the benefit of acquisitions.
Current report
Segment operating profit and Adjusted EBITDA increased by 10.9% and 10.5%, respectively. The increase was largely due to strong productivity of $24.6 million, which was partially offset by higher employee-related expenses. As a result, segment operating profit margin increased to 12.1% in the second quarter of 2024 from 10.4% in the same period last year.
Current report
Segment sales increased 2.7% from the corresponding prior year quarter from organic volume improvements of $9.9 million in global paper and converted products and $51.0 million in revenues from the acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill. These increases were partially offset by lower quarter-over-quarter sales resulting from the prior year disposition of BulkSak, lower index-related pricing of $12.4 million, and the reduction in sales of $22.5 million related to the treatment of the segment’s recycling operations as a procurement function effective January 1, 2024.
Current report
Segment operating profit and Adjusted EBITDA decreased 23.1% and 15.1%, respectively, as continued price/cost pressures lowered profitability by $46.5 million and higher employee-related expenses were only partially offset by strong productivity of $23.1 million and the benefit of higher volumes, including acquisitions, of $15.2 million. As a result, segment operating profit margin decreased to 11% in the second quarter of 2024 from 15% in the same period last year.
Current report
Six Months Ended June 30, 2024 Compared with Six Months Ended July 2, 2023
Current report
The following tables reconcile Segment Operating Profit, the closest GAAP measure of profitability, to Segment Adjusted EBITDA.
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $32,176, the Industrial Paper Packaging segment of $12,862, and the All Other group of businesses of $412.
Current report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $16,088, the Industrial Paper Packaging segment of $30,340, and the All Other group of businesses of $1,362.
Current report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $(370) and the Industrial Paper Packaging segment of $(617).
Current report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $54 and the Industrial Paper Packaging segment of $871.
Current report
5 Included in Corporate are gains from the divestiture of businesses including $(1,250) from the sale of the S3 business, part of the Industrial Paper Packaging segment, and $(3,228) from the sale of Protexic, part of the All Other group of businesses.
Current report
6 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(583), the Industrial Paper Packaging segment of $(2,467), and the All Other group of businesses of $(721).
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $32,213, the Industrial Paper Packaging segment of $5,499, and the All Other group of businesses of $3,991.
Current report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $6,695, the Industrial Paper Packaging segment of $26,531, and the All Other group of businesses of $918.
Current report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $(6,103) and the Industrial Paper Packaging segment of $(897).
Current report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $892 and the Industrial Paper Packaging segment of $349.
Current report
6 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $297, the Industrial Paper Packaging segment of $1,133, and the All Other group of businesses of $366.
Showing the first 40 of 63 passages. Open the source sections for the rest.
Removed paragraphs (16)
Previous report
First Quarter 2024 Compared with First Quarter 2023
Previous report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $16,102, the Industrial Paper Packaging segment of $6,631, and the All Other group of businesses of $206.
Previous report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $4,925, the Industrial Paper Packaging segment of $22,603, and the All Other group of businesses of $1,148.
Previous report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $92 and the Industrial Paper Packaging segment of $339.
Previous report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $(124) and the Industrial Paper Packaging segment of $655.
Previous report
5 Included in Corporate are net gains on derivatives associated with the Consumer Packaging segment of $(43), the Industrial Paper Packaging segment of $(190), and the All Other group of businesses of $(53).
Previous report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $16,226, the Industrial Paper Packaging segment of $2,934, and the All Other group of businesses of $2,004.
Previous report
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $2,680, the Industrial Paper Packaging segment of $24,544, and the All Other group of businesses of $53.
Previous report
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $6,102 and the Industrial Paper Packaging segment of $(677).
Previous report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $779 and the Industrial Paper Packaging segment of $289.
Previous report
6 Included in Corporate are losses on derivatives associated with the Consumer Packaging segment of $946, the Industrial Paper Packaging segment of $3,912, and the All Other group of businesses of $1,170.
Previous report
Net sales for the first quarter of 2024 declined by $92.2 million or 5.3%, to $1.64 billion, compared to $1.73 billion in the same period last year. The decline was primarily driven by lower selling prices of $57.1 million andthe treatment of recycling operations as a procurement function beginning January 1, 2024. Volumes remained flat as lower volumes were offset by the impact of acquisitions.
Previous report
Segment sales decreased approximately 5.0% compared to the corresponding prior year quarter as volumes continued to be impacted by lower consumer purchases from inflationary pricing impacts, primarily in snacks and confectionary markets, partially offset by year over year growth in aerosol volumes.
Previous report
Segment operating profit and Adjusted EBITDA decreased by 3.6% and 0.5%, respectively. The decline was largely due to lower volumes across the segment and negative price/cost. These declines were partially offset by continued strong productivity throughout the segment.
Previous report
Segment sales decreased 3.7% from the corresponding prior year quarter due to lower index-related pricing, continued weakness in global converted products, and the conduct of recycling as a procurement function, partially offset by higher demand in paper and the benefit of the acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill.
Previous report
Segment operating profit and Adjusted EBITDA decreased 30.2% and 21.1%, respectively, as continued price/cost pressures were only partially offset by strong productivity and the benefit from acquisitions. Segment operating profit margin decreased to 11% in the first quarter of 2024 from 15% in the same period last year, and Segment Adjusted EBITDA margin declined to 16% in the first quarter compared to 20% in the same period last year, in each case due to unfavorable resets in commercial contracts with certain customers and suppliers tied to indices. These declines were partially offset by manufacturing productivity improvements due primarily to higher utilization in our paper mills and optimization of the operations footprint.
Reworded paragraphs (41)
Previous wording
Statements included in this Quarterly Report on Form 10-Q that are not historical in nature, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, Sonoco Products Company (the “Company” or “Sonoco”) and its representatives may from time to time make other oral or written statements that are also “forward-looking statements.” Words such as “anticipate,” “assume,” “believe,” “can,” “consider,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “is designed to,” “likely,” “maintain,” “may,” “might,” “objective,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “seek,” “strategy,” “will,” “would,” or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
Current wording
Statements included in this Quarterly Report on Form 10-Q that are not historical in nature, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, Sonoco Products Company (the “Company” or “Sonoco”) and its representatives may from time to time make other oral or written statements that are also “forward-looking statements.” Words such as “anticipate,” “assume,” “believe,” “can,” “consider,” “continue,” “could,” “develop,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “is designed to,” “likely,” “maintain,” “may,” “might,” “objective,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “seek,” “strategy,” “will,” “would,” or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
Previous wording
•effects and timing of, and anticipated costs, synergies and gains resulting from our pending and completed acquisitions and divestitures, including the Company’s acquisitions of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging, the remaining interest in RTS Packaging, LLC (“RTS Packaging”) and a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”), and Inapel Embalagens Ltda. (“Inapel”), and the Company’s sale of its Sonoco Sustainability Solutions (“S3”) business, its U.S. and Mexico BulkSak businesses, its South Carolina timberland properties, and its Protective Solutions business;
Current wording
•effects and timing of, and anticipated costs, synergies and gains resulting from our other contemplated, pending and completed acquisitions and divestitures, including the Company’s acquisitions of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging, the remaining interest in RTS Packaging, LLC (“RTS Packaging”) and a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”), Inapel Embalagens Ltda. (“Inapel”), and the Company’s sale of its Sonoco Sustainability Solutions (“S3”) business, its U.S. and Mexico BulkSak businesses, its South Carolina timberland properties and its Protective Solutions business (“Protexic”);
Previous wording
•ability to identify and successfully close suitable acquisitions at the levels needed to meet growth targets;
Current wording
•ability to identify suitable acquisitions at the levels needed to meet growth targets;
Previous wording
•ability to successfully integrate newly acquired businesses into the Company’s operations and realize synergies and other anticipated benefits within the expected time period, or at all;
Current wording
•ability to successfully integrate newly acquired businesses, including Eviosys, into the Company’s operations and realize expected cost savings, synergies and other anticipated benefits relating thereto within the expected time period, or at all;
Previous wording
The Company is focused on efficient capital deployment into these larger, core business units to improve economic returns and improve integration effectiveness and speed for acquired strategic assets. In parallel, Sonoco continues to work on commercial, operational, and supply chain excellence programs to shift the mix of our business towards higher-valued products and increase overall productivity, as well as strategic pricing initiatives to better capture input costs and the value of the services provided.
Current wording
The Company is focused on efficient capital deployment into these larger, core business units to improve economic returns and improve integration effectiveness and speed for acquired strategic assets. In parallel, Sonoco has continued to work on commercial, operational, and supply chain excellence programs intended to shift the mix of our business towards higher-valued products and increase overall productivity, as well as strategic pricing initiatives intended to better capture input costs and the value of the services provided.
Previous wording
Sonoco’s goal is to increase its long-term profitability and return capital to shareholders. Over the past several years, the Company has simplified its business portfolio around fewer, bigger businesses, which has reduced operating complexity and improved agility. For example, in September 2023, the Company acquired the remaining equity interest in RTS Packaging from joint venture partner WestRock Company, to further strengthen and expand the Company’s 100% recycled fiber-based packaging solutions. In addition, the Company acquired Inapel in December 2023, significantly expanding its presence in the flexibles packaging services market in Latin America. Effective January 1, 2024, the Company integrated its flexible packaging and thermoformed packaging businesses within the Consumer Packaging segment in order to streamline operations, enhance customer service and better position the business for accelerated growth. As a result, the Company changed its operating and reporting structure to reflect the way it now manages its operations, evaluates performance, and allocates resources. Accordingly, the Company’s consumer thermoformed businesses have moved from the All Other group of businesses to the Consumer Packaging segment. Also effective January 1, 2024, the Company began conducting its recycling operations, part of the Industrial Paper Packaging segment, as a procurement function. As a result, no recycling net sales are recorded and the margin from the Company’s recycling operations reduces “Cost of sales.”
Current wording
Effective January 1, 2024, the Company integrated its flexible packaging and thermoformed packaging businesses within the Consumer Packaging segment in order to streamline operations, enhance customer service and better position the business for accelerated growth. As a result, the Company changed its operating and reporting structure to reflect the way it now manages its operations, evaluates performance, and allocates resources. Accordingly, the Company’s consumer thermoformed businesses have moved from the All Other group of businesses to the Consumer Packaging segment. Also effective January 1, 2024, the Company began conducting its recycling operations, part of the Industrial Paper Packaging segment, as a procurement function. As a result, no recycling net sales are recorded and the margin from the Company’s recycling operations reduces “Cost of sales.”
Previous wording
1 Restructuring and restructuring-related asset impairment charges are a recurring item as the Company’s restructuring programs usually require several years to fully implement, and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.
Current wording
1 Restructuring and restructuring-related asset impairment charges are a recurring item as the Company’s restructuring programs usually require several years to fully implement, and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity, the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.
Previous wording
Segment results viewed by the Company’s management to evaluate segment performance do not include the following: restructuring/asset impairment charges; amortization of acquisition intangibles; acquisition, integration and divestiture-related costs; changes in LIFO inventory reserves; gains/losses from the sale of businesses or other assets; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business. Accordingly, the term “segment operating profit” is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other.
Current wording
Segment results viewed by the Company’s management to evaluate segment performance do not include the following: restructuring/asset impairment charges; amortization of acquisition intangibles; acquisition, integration and divestiture-related costs; changes in LIFO inventory reserves; gains/losses from the sale of businesses or other assets; gains/losses from derivatives; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business. Accordingly, the term “segment operating profit” is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other.
Previous wording
Cost of goods sold decreased by $55.4 million, or 4.1%, in the first quarter of 2024 compared with the same period last year. The decrease was primarily driven by lower volumes, partially offset by cost of sales related to the acquisitions of Inapel, the Chattanooga mill and the remaining interest in RTS Packaging.
Current wording
Cost of goods sold decreased by $81.8 million, or 6.1%, in the second quarter of 2024 compared with the same period last year. Thedecrease was primarily driven by increased productivity and lower costs related to the sale of Protexic, partially offset by cost of sales related to the acquisitions of Inapel, the Chattanooga mill and the remaining interest in RTS Packaging.
Previous wording
Gross profit was $337.6 million for the three-month period ended March 31, 2024, which was $36.9 million lower than the prior-year period. The decrease in gross profit was driven by volume and pricing declines, which were partially offset by a $51.5 million benefit from improved productivity. Gross profit as a percent of sales decreased to 20.6% from 21.6% in the prior-year quarter.
Current wording
Gross profit was $357.4 million for the three-month period ended June 30, 2024, which was flat compared to the prior-year period. Gross profit as a percent of sales increased to 22.0% from 21.0% in the prior-year quarter.
Previous wording
Selling, general and administrative costs increased by $5.5 million, or 2.9%, in the first quarter of 2024 compared with the same period last year, primarily due to incremental costs associated with the prior year acquisitions of Inapel, the remaining interest in RTS Packaging and the Chattanooga Mill.
Current wording
Selling, general and administrative costs increased by $31.4 million, or 18.4%, in the second quarter of 2024 compared with the same period last year, primarilydue to higher year-over-year acquisition, integration and divestiture-related costs of $17.7 million, increased employee-related costs of $13.6 million, and incremental costs of $8.2 million associated with the prior year acquisitions of Inapel, the remaining interest in RTS Packaging, and the Chattanooga Mill.
Previous wording
Restructuring/Asset impairment charges totaled $31.6 million in the first quarter of 2024, compared with $28.8 million during the same period last year. Additional information regarding restructuring and asset impairment charges is provided in Note 5 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
Restructuring/Asset impairment charges totaled $19.3 million in the second quarter of 2024, compared with $6.1 million during the same period last year. Additional information regarding restructuring and asset impairment charges is provided in Note 5 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Gain on divestiture of business and other assets of $72.0 million in the first quarter of 2023 reflects gains from the divestiture of the Company’s S3 business and the sale of the Company’s timberland properties. See Note 3 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Current wording
Gain on divestiture of business and other assets of $4.5 million in the second quarter of 2024 reflects gains from the Company’s divestitures of Protexic and the S3 business. Gains of divestiture of business and other assets of$7.4 million in the second quarter of 2023 reflects gains from the divestiture of the Company’s U.S. BulkSak business. See Note 3 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Previous wording
Net interest expense for the first quarter of 2024 decreased to $27.7 million, compared with $32.7 million during the first quarter of 2023. The decrease of $5.0 million was primarily due to lower year over year average debt balances and interest income from the Company’s cross-currency swap entered into in December 2023.
Current wording
Net interest expense for the second quarter of 2024 decreased to $26.1 million, compared with $32.3 million during the second quarter of 2023. The decrease of $6.3 million was primarily due to lower year over year average debt balances and interest income from the Company’s cross-currency swaps.
Previous wording
The effective tax rates reflected in GAAP net income and Adjusted Earnings in the first quarter of 2024 were 21.3% and 25.6%, respectively, compared with 24.3% and 24.8%, respectively, in the corresponding prior year quarter. The decrease in the GAAP rate was primarily due to a 2024 benefit from a deferred tax adjustment. The increase in the effective tax rate on Adjusted Earnings was due to variances in tax rates between the jurisdictions in which the respective income and charges were taxed.
Current wording
The effective tax rates reflected in GAAP net income and Adjusted Earnings in the second quarter of 2024 were 23.5% and 25.5%, respectively, compared with 26.8% and 25.6%, respectively, in the corresponding prior year quarter. The decrease in the GAAP effective tax rate was primarily related to the difference between the tax basis and the book basis on the sale of the shares of Protexic in Mexico. The effective tax rate on Adjusted Earnings was relatively flat quarter over quarter.
Previous wording
The Company’s operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. The following table summarizes net sales attributable to each of the Company’s segments and the All Other group of businesses for the first quarters of 2024 and 2023:
Current wording
The Company’s operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. The following table summarizes net sales attributable to each of the Company’s segments and the All Other group of businesses for the second quarters of 2024 and 2023:
Previous wording
The following table summarizes operating profit attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the first quarters of 2024 and 2023:
Current wording
The following table summarizes operating profit attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the second quarters of 2024 and 2023:
Previous wording
The following table summarizes Adjusted EBITDA attributable to each of the Company’s reportable segments and the All Other group of businesses during the first quarters of 2024 and 2023:
Current wording
The following table summarizes Adjusted EBITDA attributable to each of the Company’s reportable segments and the All Other group of businesses during the second quarters of 2024 and 2023:
Previous wording
The following table summarizes restructuring/asset impairment charges attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the first quarters of 2024 and 2023:
Current wording
The following table summarizes restructuring/asset impairment charges attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the second quarters of 2024 and 2023:
Previous wording
Sales declined 14.1% from the same quarter of the prior year primarily due to lower volumes.
Current wording
Sales declined 36.2% from the same quarter of the prior year primarily due to the sale of Protexic.
Previous wording
Operating profit and Adjusted EBITDA dropped by 24.1% and 20.4%, respectively, in the first quarter of 2024 compared to the same period last year, primarily due to lower volumes and negative price/cost, partially offset by higher productivity. As a result, operating margin decreased to 12.8% in the first quarter of 2024 compared to 14.5% in the same quarter last year.
Current wording
Operating profit and Adjusted EBITDA dropped by 39.1% and 37.3%, respectively, in the second quarter of 2024 compared to the same period last year, primarily due to the sale of Protexic, lower volumes and negative price/cost, partially offset by higher productivity. As a result, operating margin decreased to 14.6% in the second quarter of 2024 compared to 15.3% in the same quarter last year.
Previous wording
5 Included in Corporate are gains from the sale of the Company’s timberland properties in the amount of $(60,945) and the sale of its S3 business in the amount of $(11,065), both of which are associated with the Industrial Paper Packaging segment.
Current wording
5 Included in Corporate are gains from the sale of the Company’s timberland properties in the amount of $(60,945), the sale of its S3 business in the amount of $(11,065), and the sale of its U.S. BulkSak businesses in the amount of $(7,371), all of which are associated with the Industrial Paper Packaging segment.
Previous wording
Net income attributable to Sonoco for thefirst quarter of 2024 decreased to $65.2 million, or $0.66 per diluted share, compared to $148.3 million, or $1.50 per diluted share, for the same period of 2023. This decrease was primarily due to the absence of a $72.0 million benefit from the sale of the Company’s timberland properties and the divestiture of the S3 business in the first quarter of 2023, as well as lower volumes and pricing, which were partially offset by higher productivity. Adjusted Earnings for the first quarter of 2024 were $111.5 million ($1.12 per diluted share), compared with $137.6 million ($1.40 per diluted share) for the same period in 2023.
Current wording
GAAP net income attributable to Sonoco for the first six months of 2024 decreased to $156.0 million, or $1.57 per diluted share, compared to $263.0 million, or $2.66 per diluted share, reported for the same period of 2023. This decrease was primarily due to the absence of a $72.0 million benefit from the sale of the Company’s timberland properties and the divestiture of the S3 business in 2023, additional acquisition, integration and divestiture-related costs of $18.2 million and higher restructuring and asset impairment charges of $16.0 million, as unfavorable price/cost was offset by higher productivity. Adjusted Earnings for the six-month period ended June 30, 2024 decreased 12.9% to $238.3 million, or $2.40 per diluted share, from $273.6 million, or $2.77 per diluted share, in the six-month period ended July 2, 2023.
Previous wording
GAAP operating profit for the first quarter of 2024 was $112.5 million, a decrease of 51.0% from the $229.6 million reported in the first quarter of 2023. The decrease in GAAP operating profit was primarily due to the absence of a $72.0 benefit from the sale of the Company’s timberland properties and the divestiture of the S3 business in the first quarter of 2023, as well as lower volumes and pricing, which were partially offset by higher productivity. Adjusted Operating Profit for the first quarter of 2024 was $176.0 million, a decrease of 17.5% from the $213.4 million reported for the same period in 2023.
Current wording
GAAP operating profit for the first six months of 2024 was $252.8 million, a decrease of 39.4% from the $417.5 million reported in the same period last year. The decrease in GAAP operating profit was primarily due to the absence of a $72.0 million benefit from the sale of the Company’s timberland properties and the divestiture of the S3 business in 2023, additional acquisition, integration and divestiture-related costs of $18.2 million, and higher restructuring and asset impairment charges of $16.0 million, as unfavorable price/cost was offset by higher productivity. Adjusted Operating Profit for the first six months of 2024 was $369.0 million, a decrease of 13.1% from the $424.4 million reported for the same period in 2023.
Previous wording
Non-operating pension costs were $0.4 million lower year over year primarily attributable to settlement costs in Canada in the prior year related to the Company’s defined benefit plan liabilities. Additional information regarding costs of the Company’s retirement plans is provided in Note 11 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
Non-operating pension costs increased $0.5 million year over year due to higher interest costs on the Company’s defined benefit plan liabilities, partially offset by increased expected returns on assets. Additional information regarding costs of the Company’s retirement plans is provided in Note 12 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Cash generated from operations for the first three months of 2024 was $166.2 million, compared with $98.0 million in the same period of 2023, a year-over-year increase of $68.2 million. While GAAP net income decreased by $83.0 million year over year, this decline was primarily attributable to the absence of non-cash gains from the sales of the Company’s S3 business and timberland properties during the first quarter of 2023. Net working capital provided $0.8 million of cash in the first three months of 2024, while using $91.5 million in the same period last year, for a year-over-year increase in operating cash flow of $92.3 million driven primarily by a year-over-year increase in cash provided by payable to suppliers of $97.3 million. Purchasing activity in the first quarter of 2023 was lower than normal due to abnormally high levels of certain inventory items that were maintained at the end of 2022 as a result of supply chain challenges, whereas inventory and purchasing activity returned to more normalized levels in the current period. Accounts receivable used $9.8 million more cash during the first three months of 2024 than in the same period last year as a result of the impact of changing mix in customer payment terms more than offsetting lower sales volumes. The Company continues to actively manage all components of net working capital by managing inventories and reviewing payment terms with customers and suppliers to appropriately address risk and balance economic benefit. Changes in accrued expenses and other assets and liabilities used $7.1 million in the three-month period ended March 31, 2024, compared with using $18.9 million in the same period last year. The $11.8 million lower use of cash in the current year was largely driven by the lower year-over-year payout of management incentive compensation. Cash contributions to the Company’s retirement plans were $4.0 million in the first three months of 2024, compared with $4.9 million in the same period last year.
Current wording
Cash generated from operations for the first six months of 2024 was $275.5 million, compared with $348.6 million in the same period of 2023, a year-over-year decrease of $73.1 million. While GAAP net income decreased by $106.8 million year over year, this decline was primarily attributable to the absence of non-cash gains from the sales of the Company’s S3 business and timberland properties during the first quarter of 2023. Net working capital used $29.2 million of cash in the first six months of 2024, while providing $0.9 million in the same period last year, for a year-over-year decrease in operating cash flow of $30.1 million. Accounts receivable used$85.2 million more cash during the first six months of 2024 than in the same period last year as a result of the impact of the changing mix in customer payment terms more than offset lower revenues. Inventory was a source of cash of$15.4 million in the first six months of 2024, while last year was a source of cash of$148.9 million. This year-over-year decrease was expected as the Company ended 2022 with a substantial inventory position driven by pandemic-related supply chain uncertainty. Conversely, accounts payable was a source of cash of$57.9 million in the first six months as compared to a use of cash of$130.7 million in the same period last year. As inventories and supply chain normalized in the second half of 2023 and first half of 2024, purchasing activity has normalized. The Company has continued to actively manage all components of net working capital by managing inventories and reviewing payment terms with customers and suppliers to appropriately address risk and balance economic benefit. Changes in accrued expenses and other assets and liabilities used cash totaling$3.7 million in the six-month period ended June 30, 2024, and used $38.0 million in the same period last year. The $34.3 million lower use of cash in the current year was largely driven by the lower year-over-year payout of management incentive compensation. Cash contributions to the Company’s retirement plans were $9.1 million in the first six months of 2024, compared with $7.5 million in the same period last year.
Previous wording
Investing activities used $81.7 million of cash in the first three months of 2024, compared with $3.0 million in the same period last year, a higher year-over-year use of cash of $78.8 million. While capital expenditures during the first three months of 2024 were $86.5 million, $3.1 million higher than the same period last year, this use of cash was partially offset in the prior year by proceeds from the sale of assets of $71.4 million, primarily from the March 2023 sale of the Company’s timberland properties. In addition, proceeds from the sale of the Company’s S3 business provided $13.8 million of cash in the first three months of 2023. Investments in affiliated companies used $5.0 million of cash during the three-month period ended April 2, 2023 as a result of the Company’s purchase of a 2.7% equity interest in Northstar Recycling Co. Other net investing activities provided $4.9 million more cash year over year, primarily as a result of higher life insurance proceeds received in the current year. Net capital spending for 2024 is expected to be approximately $350 million compared to $283 million in 2023.
Current wording
Investing activities used $96.6 million of cash in the first six months of 2024, compared with $80.4 million in the same period last year, a higher year-over-year use of cash of $16.2 million. Capital expenditures during the first six months of 2024 were $179.7 million, $18.0 million higher than the same period last year. Proceeds from sale of businesses provided $81.5 million in the first six months of 2024, primarily driven by the sale of Protexic, compared with $13.8 million in the prior year, from the sale of the Company’s S3 business. Proceeds from the sale of assets were $71.9 million in the first six months of 2023, primarily from the March 2023 sale of the Company’s timberland properties. Additionally, proceeds from the settlement of a net investment hedge provided $9.1 million of cash in the first six months of 2024. Investing cash flows in the first six months of 2024 also reflect the Company’s $10.0 million investment to increase its ownership in a small South Carolina based designer and manufacturer of sustainable protective packaging solutions from 20.5% to 39.9%. In the same period last year, the Company used $5.0 million of cash to purchase a 2.7% equity interest in Northstar Recycling Co. Other net investing activities provided $4.9 million more cash year over year, primarily as a result of higher insurance proceeds received in the current year. Net capital spending for 2024 is expected to be approximately $350 million to $375 million compared to $283 million in 2023.
Previous wording
Financing activities used $62.7 million of cash in the three-month period ended March 31, 2024, while using $118.2 million in the corresponding prior-year period, a year-over-year decrease of $55.5 million. The decrease was largely driven by higher debt repayments in the prior year. Cash used to pay dividends increased by $2.4 million year over year reflecting the increase in the quarterly dividend payment from $0.49 per share to $0.51 per share approved by the Company’s Board of Directors in April 2023. Cash used to repurchase the Company’s common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $9.1 million in the three-month period ended March 31, 2024, compared to $10.6 million in the same period last year.
Current wording
Financing activities used $178.0 million of cash in the six-month period ended June 30, 2024, compared with $185.0 million in the same period last year. The $7.0 million lower year-over-year use of cash was largely driven by lower year-over-year net debt repayments of $24.0 million, partially offset by payments of loan financing costs of $19.0 million in the first six months of 2024. Cash used to pay dividends increased by $3.6 million year over year reflecting the increase in the quarterly dividend payment from $0.51 per share to $0.52 per share approved by the Company’s Board of Directors in April 2024. Cash used to repurchase the Company’s common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $9.2 million in the six-month period ended June 30, 2024, compared to $10.6 million in the same period last year.
Previous wording
The Company’s cash balances are held in numerous locations throughout the world. At March 31, 2024 and December 31, 2023, approximately $114.0 million and $93.8 million, respectively, of the Company’s reported cash and cash equivalents balances of $172.2 million and $151.9 million, respectively, were held outside of the United States by its foreign subsidiaries. Cash held outside of the United States is available to meet local liquidity needs or for capital expenditures, acquisitions, and other offshore growth opportunities. As the Company has maintained sufficient domestic liquidity through a combination of operating cash flow generation and access to bank and capital market borrowings, management has generally considered its foreign unremitted earnings to be indefinitely invested outside the United States and currently has no plans to repatriate such earnings, other than excess cash balances that can be repatriated at minimal tax cost. Accordingly, as of March 31, 2024 the Company is not providing for taxes on these amounts for financial reporting purposes. Computation of the potential deferred tax liability associated with unremitted earnings considered to be indefinitely reinvested is not practicable.
Current wording
The Company’s cash balances are held in numerous locations throughout the world. At June 30, 2024 and December 31, 2023, approximately $116.4 million and $93.8 million, respectively, of the Company’s reported cash and cash equivalents balances of $140.2 million and $151.9 million, respectively, were held outside of the United States by its foreign subsidiaries. Cash held outside of the United States is available to meet local liquidity needs or for capital expenditures, acquisitions, and other offshore growth opportunities. As the Company has maintained sufficient domestic liquidity through a combination of operating cash flow generation and access to bank and capital market borrowings, management has generally considered its foreign unremitted earnings to be indefinitely invested outside the United States and currently has no plans to repatriate such earnings, other than excess cash balances that can be repatriated at minimal tax cost. Accordingly, as of June 30, 2024 the Company is not providing for taxes on these amounts for financial reporting purposes. Computation of the potential deferred tax liability associated with unremitted earnings considered to be indefinitely reinvested is not practicable.
Previous wording
During the three-month period ended March 31, 2024, the Company reported a net decrease in cash and cash equivalents of $1.6 million due to currency translation adjustments resulting from a stronger U.S. dollar relative to certain foreign currencies in which cash and cash equivalents were held.
Current wording
During the six-month period ended June 30, 2024, the Company reported a net decrease in cash and cash equivalents of $12.6 million due to currency translation adjustments resulting from a stronger U.S. dollar relative to certain foreign currencies in which cash and cash equivalents were held.
Previous wording
The Company operates a $500 million commercial paper program, supported by a $900 million unsecured revolving credit facility with a syndicate of banks that is committed through June 2026. The Company has the contractual right to draw funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market.
Current wording
On May 3, 2024, the Company increased the commitments under its unsecured revolving credit facility by$350 million to an aggregate amount of$1.25 billion and extended the maturity date to May 3, 2029, and also increased its$500 million commercial paper program by$750 million to$1.25 billion. The commercial paper program is supported by the Company’s revolving credit facility. The Company has the contractual right to draw funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market.
Previous wording
On April 1, 2024, subsequent to the end of the first quarter, the Company completed the sale of Protexic, part of the All Other group of businesses, to Black Diamond Capital Management, LLC for cash proceeds of $82 million. The Company used the majority of these proceeds to pay down debt.
Current wording
On April 1, 2024, the Company completed the sale of Protexic, part of the All Other group of businesses, to Black Diamond Capital Management, LLC for net cash proceeds of $80.3 million. The Company used the majority of these proceeds to pay down debt. The Company believes that this and other potential divestitures will enable greater strategic clarity and operational focus while also generating proceeds to fund deleveraging and capital investments in core businesses.
Previous wording
At March 31, 2024, the Company had scheduled debt maturities of approximately $454 million over the next twelve months, including $400 million aggregate principal amount of its 1.80% notes due February 2025. As the Company had no commercial paper balances outstanding at March 31, 2024, all of the $900 million in committed capacity under its revolving credit facility was available for draw down. The Company believes that cash and cash equivalents on hand and expected net cash flows generated from operating and investing activities, together with available capacity under the Company’s existing borrowing arrangements and the potential for additional borrowings or the issuance of new debt securities, will provide sufficient liquidity to cover debt maturities and other cash flow needs of the Company over the next twelve months and beyond.
Current wording
At June 30, 2024, the Company had scheduled debt maturities of approximately$485 million over the next twelve months, including $400 million aggregate principal amount of its 1.80% notes due February 2025. As the Company had $28 million in commercial paper balances outstanding at June 30, 2024,$1.22 billion in committed capacity under its revolving credit facility was available for draw down. The Company believes that cash and cash equivalents on hand, expected net cash flows generated from operating and investing activities, and expected proceeds from divestitures, together with available capacity under the Company’s increased borrowing arrangements and the opportunity to raise additional capital through one or more capital markets transactions, will provide sufficient liquidity to fund the Eviosys acquisition and cover debt maturities and other cash flow needs of the Company over the next twelve months and beyond.
Previous wording
The Company continually explores strategic acquisition opportunities that may result in the use of cash. Given the nature of the acquisition process, the timing and amounts of such expenditures are not always predictable. The Company expects that any acquisitions requiring funding in excess of cash on hand would be financed using existing credit facilities or additional borrowings.
Current wording
The Company continually explores strategic acquisition opportunities that may result in the use of cash. Given the nature of the acquisition process, the timing and amounts of such expenditures are not always predictable. The Company expects that any additional acquisitions requiring funding in excess of cash on hand would be financed using existing credit facilities or additional borrowings.
Previous wording
The Company anticipates making additional contributions to its other pension and postretirement plans of approximately$16 million during the remainder of 2024, resulting in expected total contributions to these plans of approximately $20 million in 2024. Future funding requirements beyond the current year will vary depending largely on investment performance, future actuarial assumptions, and legislative actions.
Current wording
The Company anticipates making additional contributions to its other pension and postretirement plans of approximately$12 million during the remainder of 2024, resulting in expected total contributions to these plans of approximately $21 million in 2024. Future funding requirements beyond the current year will vary depending largely on investment performance, future actuarial assumptions, and legislative actions.
Previous wording
Turkey has also been deemed to be a highly inflationary economy under U.S. GAAP since the first quarter of 2022. Accordingly, the Company considers the U.S. dollar to be the functional currency of its operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S. dollars with changes recorded through earnings. The cumulative impact of applying highly inflationary accounting to Turkey has been a pretax charge to earnings of $7.6 million ($5.8 million after tax), including $1.1 million ($0.8 million after tax) during thethree-month period ended March 31, 2024. The magnitude of future earnings impacts, however, is uncertain as such impacts are dependent upon unpredictable movements in the Turkish lira relative to the U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges. However, the Company believes its exposure is limited to its net investment in Turkey which was approximately $18.1 million as of March 31, 2024.
Current wording
Turkey has also been deemed to be a highly inflationary economy under U.S. GAAP since the first quarter of 2022. Accordingly, the Company considers the U.S. dollar to be the functional currency of its operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S. dollars with changes recorded through earnings. The cumulative impact of applying highly inflationary accounting to Turkey has been a pretax charge to earnings of $7.5 million ($5.8 million after tax), including $1.0 million ($0.8 million after tax) during thesix-month period ended June 30, 2024. The magnitude of future earnings impacts, however, is uncertain as such impacts are dependent upon unpredictable movements in the Turkish lira relative to the U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges. However, the Company believes its exposure is limited to its net investment in Turkey which was approximately $22.6 million as of June 30, 2024.
Previous wording
At March 31, 2024, the Company had derivative contracts outstanding to hedge the prices on a portion of anticipated natural gas and aluminum purchases. These contracts, some of which qualify as cash flow hedges, include natural gas swaps totaling approximately 6.6 million metric million British thermal units (“MMBTUs”) and aluminum swaps totaling 355 metric tons. These contracts have various maturity dates ranging through December 2024. The total fair market value of these instruments resulted in a net loss position of $6.6 million and $6.8 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
At June 30, 2024, the Company had derivative contracts outstanding to hedge the prices on a portion of anticipated natural gas and aluminum purchases. These contracts, some of which qualify as cash flow hedges, include natural gas swaps totaling approximately 6.3 million metric million British thermal units (“MMBTUs”) and aluminum swaps totaling 222 metric tons. These contracts have various maturity dates ranging through December 2025. The total fair market value of these instruments resulted in a net loss position of $3.0 million and $6.8 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
The Company routinely enters into derivative currency contracts to mitigate the risk of unfavorable fluctuations inthe exchange rate on certain anticipated foreign currency cash flows. These contracts qualify as cash flow hedges and have various maturity dates ranging from April 2024 through December 2024. The total market value of these instruments resulted in netgain positions of $1.5 million and $1.5 million at March 31, 2024 and December 31, 2023, respectively. In addition, at March 31, 2024, the Company had various currency contracts outstanding to hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables. Although placed as economic hedges, the Company does not apply hedge accounting to these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur.
Current wording
The Company routinely enters into derivative currency contracts to mitigate the risk of unfavorable fluctuations inthe exchange rate on certain anticipated foreign currency cash flows. These contracts qualify as cash flow hedges and have various maturity dates ranging through December 2024. The total market value of these instruments resulted in a net loss position of $1.1 million at June 30, 2024 and a net gain position of $1.5 million at December 31, 2023. In addition, at June 30, 2024, the Company had various currency contracts outstanding to hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables. Although placed as economic hedges, the Company does not apply hedge accounting to these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur.
Previous wording
During the fourth quarter of 2023, the Company became party to cross-currency swap agreements with a total notional amount of $500 million to effectively convert a portion of the Company’s fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The swap agreements provide for the Company to receive semi-annual interest payments in U.S. dollars at a fixed rate and to make semi-annual interest payments in euros at a fixed rate. The risk management objective of entering into such agreements is to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros. The agreements are designated as net investment hedges for accounting purposes. The gain or loss on the net investment hedge derivative instrument is included in the foreign currency translation component of accumulated other comprehensive loss until the net investment is sold, diluted, or liquidated. Interest payments received for the cross-currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense. At March 31, 2024, the fair value of the Company’s net investment hedges was a gain position of $4.9 million, and a translation gain of$3.6 million (net of income taxes of $1.2 million) was reported as a component of “Accumulated other comprehensive loss” within “Foreign currency items.”
Current wording
During the fourth quarter of 2023, the Company became a party to cross-currency swap agreements with a total notional amount of $500 million to effectively convert a portion of the Company’s fixed-rate U.S. dollar denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The swap agreements, which had a maturity of December 18, 2026, provided for the Company to receive semi-annual interest payments in U.S. dollars at a fixed rate and to make semi-annual interest payments in euros at a fixed rate. The risk management objective of entering into the swap agreements was to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros. The agreements were designated as net investment hedges for accounting purposes. The gain or loss on the net investment hedge derivative instruments is included in the “Foreign currency translation” component of “Accumulated other comprehensive loss” until the net investment is sold, diluted, or liquidated. Interest payments received for the cross-currency swaps are excluded from the net investment hedge effectiveness assessment and are recorded in “Interest expense” in the Company’s Condensed Consolidated Statements of Income. The assumptions used in measuring fair value of the cross-currency swaps are considered level 2 inputs, which are based upon the Euro-to-U.S. dollar exchange rate market. The fair value of the Company’s net investment hedges was a loss position of $0.3 million and a loss position of $5.1 million at June 30, 2024 and December 31, 2023, respectively. Translation losses of $0.2 million (net of income taxes of $0.1 million) and $3.8 million (net of income taxes of $1.3 million) were reported as components of “Accumulated other comprehensive loss” within “Foreign currency items” at June 30, 2024 and December 31, 2023, respectively.
Previous wording
As a result of continued strengthening of the U.S. dollar against the euro, as well as a reduction in the differential between U.S. and European interest rates, the fair value of the Company’s net investment hedge continued to appreciate into the month of April. On April 15, 2024, subsequent to the end of the quarter, the Company terminated the swap agreements and received a cash settlement of $11.6 million. The foreign currency translation gain of approximately $3.1 million, net of tax, will be included as a component of “Accumulated other comprehensive loss” in the second quarter of 2024. Following the unwind of the swaps, the Company entered into new cross-currency swap agreements with a total notional amount of $500 million to effectively convert a portion of the Company’s fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The new swap agreements have a maturity of May 1, 2027.
Current wording
As a result of continued strengthening of the U.S. dollar against the euro, as well as a reduction in the differential between U.S. and European interest rates, the fair value of the Company’s net investment hedges appreciated significantly through April 2024. On April 15, 2024, the Company terminated the swap agreements and received a cash settlement of $9.1 million. The foreign currency translation gain of approximately $3.1 million, net of tax, is included as a component of “Accumulated other comprehensive loss.” Following the unwind of the swaps, the Company entered into new cross-currency swap agreements with a total notional amount of $500 million to effectively convert a portion of the Company’s fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The new swap agreements, which have a maturity of May 1, 2027, share the same risk management objective as the terminated cross-currency swap agreements and are also designated as net investment hedges for accounting purposes.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Sonoco’s goal is to increase its long-term profitability and return capital to shareholders. Over the past several years, the Company has simplified its business portfolio around fewer, bigger businesses, which has reduced operating complexity and improved agility. For example, in June 2024, the Company announced it had entered into an agreement to acquire Eviosys, a leading European manufacturer of food cans, ends and closures, for approximately $3.9 billion. The transaction is expected to expand Sonoco’s global leadership in metal food can and aerosol packaging and to facilitate Sonoco’s ability to partner with customers and advance innovation and sustainability in metal packaging offerings. In addition, in September 2023, the Company acquired the remaining equity interest in RTS Packaging from joint venture partner WestRock Company, to further strengthen and expand the Company’s 100% recycled fiber-based packaging solutions. In addition, the Company acquired Inapel in December 2023, significantly expanding its presence in the flexibles packaging services market in Latin America.
Current report — wording carried from elsewhere
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
Current report — wording carried from elsewhere
The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for each of the periods presented.
Current report — wording carried from elsewhere
Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS
Current report — wording carried from elsewhere
Adjusted EBITDA and Adjusted EBITDA Margin
Current report — wording carried from elsewhere
The following discussion provides a review of results for the six-month period ended June 30, 2024 compared with the six-month period ended July 2, 2023.
Current report — wording carried from elsewhere
GAAP net interest expense for thefirst six months of 2024 decreased to $53.7 million, compared with $65.0 million during the first six months of 2023. The decrease of $11.3 million was primarily due to lower year-over-year average debt balances and interest income from the Company’s cross-currency swaps.
Current report — wording carried from elsewhere
The following table summarizes net sales attributable to each of the Company’s reportable segments, and the All Other group of businesses during the first six months of 2024 and 2023:
Current report — wording carried from elsewhere
The following table summarizes operating profit attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the first six months of 2024 and 2023:
Current report — wording carried from elsewhere
The following table summarizes Adjusted EBITDA attributable to each of the Company’s reportable segments and the All Other group of businesses during the first six months of 2024 and 2023:
Current report — wording carried from elsewhere
The following table summarizes restructuring/asset impairment charges attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the first six months of 2024 and 2023: