SONOCO PRODUCTS CO
For the period ended Mar 30, 2025. Filed May 2, 2025.
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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.
Mar 30, 2025 · Filed May 2, 2025
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 2024-09-29; filed 2024-11-01.
0000091767-24-000060
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-30; filed 2025-05-02.
0000091767-25-000023
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 268 previous paragraphs and 205 current paragraphs.
106 unchanged; 54 reworded; 45 added; 100 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 8 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 (45)
Current report
•supply chain disruptions;
Current report
•improved productivity and cost containment;
Current report
•effects and timing of, and anticipated gains and costs, of the Company’s restructuring and portfolio simplification activities, including with respect to streamlining of the Company’s organizational structure and the Company’s contemplated, pending, and completed divestitures, including the Company’s sale of its Thermoformed and Flexibles Packaging business and its global Trident business (collectively, “TFP”), its Protective Solutions business (“Protexic”), and two production facilities in China, and the potential divestiture of the Company’s ThermoSafe business;
Current report
Sonoco’s portfolio transformation strategy also includes significant divestitures. For example, on April 1, 2025, subsequent to the end of the first quarter, the Company completed the sale of TFP to TOPPAN Holdings Inc. (“Toppan”) for a purchase price of approximately $1.8 billion on a cash-free and debt-free basis and subject to customary adjustments. On a standalone basis, TFP had revenue of $1.3 billion in 2024.
Current report
Global Trade Developments
Current report
Recent developments in U.S. and foreign trade policy have increased uncertainty for the global economy and the Company’s business. On March 4, 2025, the U.S. Government (the “Administration”) imposed a 25% tariff on all imports from Canada or Mexico. After imposing this tariff, the Administration allowed for the temporary exemption from the tariff for any goods that comply with the United States-Mexico-Canada Agreement (“USMCA”), which has helped mitigate the impact of the tariff on the Company’s operations in North America. On February 10, 2025, the Administration announced the expansion of Section 232 steel and aluminum tariffs (“Section 232 Tariffs”) on steel and aluminum imported into the United States, effective March 12, 2025, and the termination of the granting of new exclusions to mitigate these tariffs. As a result, imported steel and aluminum is now subject to a 25% duty.
Current report
Further, on April 2, 2025, the Administration announced an across-the-board 10% tariff on imported goods from most countries, with materially higher tariffs imposed on many of the countries, as well as other trade policy changes. The Administration subsequently suspended the implementation of certain of these trade policy changes, with many of the affected countries expected to negotiate separate trade agreements with the Administration during the suspension. In response to the Administration’s tariff actions, some countries have announced additional trade measures, including reciprocal tariffs, which may continue to give rise to further escalations of trade measures by the United States and impacted countries. Canada has imposed retaliatory tariffs on goods coming from the United States, including a 25% tariff on a variety of enumerated goods on March 4 and March 13, 2025. At the same time, Canada has not exempted USMCA-qualified goods from these tariffs on U.S.-origin goods. Some of the enumerated goods subject to this tariff include products and materials shipped to Sonoco’s plants in Canada.
Current report
While the exact scope of any tariffs or other trade policy changes that will ultimately be implemented is not known at this time, the Company does not currently expect these recently announced tariffs and proposed future tariffs to have a material direct effect on the Company’s profitability or cash flows over the remainder of 2025 because the Company’s manufacturing network is designed to serve local markets, reducing its exposure to cross-border disruptions and tariff-related risks, and while the Company is actively working with its customers to help manage the impacts of higher input costs driven by tariffs, its business model allows for pricing adjustments when necessary. In addition, the Company believes its transformed portfolio following the Eviosys acquisition and the sale of TFP is significantly more resilient, with over two-thirds of the Company’s sales for the three-month period ended March 30, 2025 coming from the Consumer Packaging segment, a segment that has historically demonstrated strong performance across economic cycles. In addition, while the Section 232 Tariffs impact input costs for the Company’s U.S.-based metal packaging and rigid paper container businesses (part of the Consumer Packaging segment), which source a portion of their steel and aluminum purchases from outside the United States, the Company intends, and has the contractual ability, to pass such increases in cost due to tariffs to its customers.
Current report
The ultimate resolution and consequences of these trade policy developments, and their effect on the Company in uncertain and the Company will continue to monitor the Administration’s trade policy changes closely in order to adapt its strategies and to maintain competitiveness in a challenging market environment. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Current report
Management may also assess year-over-year changes in operating performance in terms of productivity savings or usage, which is driven by procurement savings or losses, production efficiencies or inefficiencies and the effect of fixed cost reduction initiatives. Management views productivity as a measure of operational excellence of the business and uses it to evaluate improvements in manufacturing efficiency, including automation, and other fixed and variable cost reduction initiatives. Management provides investors with this information to evaluate Sonoco’s operating results in a manner similar to how management evaluates operating performance. The Company calculates productivity savings as the
Current report
difference between applicable current period costs and prior year costs, excluding the impact of estimated inflation or deflation, and volume changes where appropriate.
Current report
On December 18, 2024, the Company announced that it had entered into an agreement to sell TFP to Toppan. This sale was completed on April 1, 2025, subsequent to the end of the first quarter. In accordance with applicable accounting guidance, the results of TFP are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for all periods presented in this Quarterly Report on Form 10-Q. Further, the Company reclassified the assets and liabilities of TFP as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets as of March 30, 2025 and December 31, 2024. The Condensed Consolidated Statements of Comprehensive Income, Changes in Total Equity, and Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. All amounts, percentages and disclosures for all periods presented in this Quarterly Report on Form 10-Q reflect only the continuing operations of Sonoco unless otherwise noted.
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First Quarter 2025 Compared with First Quarter 2024
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Consolidated net sales for the first quarter of 2025 were $1.7 billion, a $400.6 million or 30.6% increase from the first quarter of 2024. The increase was driven by $464.3 million in sales from the Eviosys acquisition in December 2024 and increased sales of $22.2 million as a result of increased selling prices across the Industrial Paper Packaging and Consumer Packaging segments. These increases were partially offset by a decrease of $51.5 million of sales related to divestitures and a net decline in volume/mix of $9.7 million.
Current report
GAAP operating profit for the first quarter of 2025 was $126.9 million, an increase of 74.8% from the $72.6 million reported in the first quarter of 2024. The increase in GAAP operating profit was primarily due to a $82.5 million increase in gross profit, and a decrease in restructuring related costs of $17.4 million from the prior year, partially offset by an increase of $41.5 million in selling, general and administrative expenses including acquisition and integration costs, and a net loss on dispositions of $4.2 million. Adjusted Operating Profit for the first quarter of 2025 was $212.7 million, an increase of 63.1% from the $130.4 million reported for the same period in 2024.
Current report
Cost of goods sold increased by $318.1 million, or 30.7%, in the first quarter of 2025 compared with the first quarter of 2024. This increase was primarily driven by the Eviosys acquisition, partially offset by the decline in costs from the sale of the Protexic business in April 2024, improved productivity from procurement savings, production efficiencies, fixed cost reduction initiatives, and materials price reductions. Gross profit margins were flat at 20.7% in each of the first quarter of 2025 and the first quarter of 2024.
Current report
Selling, general and administrative costs increased by $41.5 million, or 24.8%, and were 12.2% of sales in the first quarter of 2025, compared to 12.8% of sales in the first quarter of 2024. This increase was primarily due to the acquisition of Eviosys and the increase in acquisition, integration, and divestiture-related costs.
Current report
Other expense, net totaled $6.5 million in the first quarter of 2025. The amount represents charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivables in order to accelerate its cash collection cycle primarily within our Consumer Packaging segment.
Current report
Discontinued Operations
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Net income from discontinued operations totaled $5.2 million for the first quarter of 2025, compared with $29.7 million for the first quarter of 2024. The decrease in net income is primarily due to the increase in interest expense related to debt required to be repaid upon closure of the sale of TFP.
Current report
Segment sales increased $484.9 million over the corresponding prior year quarter primarily due to increased sales from the 2024 Eviosys acquisition of $464.3 million and increased volumes/mix of $23.3 million. Year-over-year prices remained fairly flat.
Current report
Segment operating profit increased over the corresponding prior year quarter primarily due to operating profits from the Eviosys acquisition of $49.2 million and positive price/cost of $27.1 million. As a result, segment operating profit margin increased to 13.2% in the first quarter of 2025 from 10.1% in the same period last year.
Current report
Segment sales decreased $35.4 million from the corresponding prior year quarter primarily due to lower sales of $26.0 million from a decline in volume/mix, lower sales of $11.6 million due to the disposition of facilities in China during the fourth quarter of 2024, and $16.4 million unfavorable impact from foreign currency exchange rates. These headwinds were only partially offset by a $20.7 million increase from higher selling prices.
Current report
Segment operating profit increased over the corresponding prior year quarter primarily due to a $10.3 million increase from a positive price/cost environment combined with a $7.3 million increase attributable to strong productivity from procurement savings, production efficiencies, and fixed cost reduction initiative. These increases were partially offset by a decline of $5.8 million attributable to lower volumes and an unfavorable impact from foreign currency exchange rates. As a result, segment operating profit margin increased to 12.8% in the first quarter of 2025 from 11.1% in the same period last year.
Current report
1 Operating profit, income before income taxes, and provision for income taxes exclude results related to discontinued operations of $37,791, $12,979 and $7,807, respectively.
Current report
2 Acquisition, integration and divestiture-related costs relate mostly to the Company’s December 2024 acquisition of Eviosys and the divestiture of the TFP business, which was completed on April 1, 2025.
Current report
3 Other adjustments include discrete tax items primarily related to a $3,500 tax expense due to the reduction of the deferred tax asset on the outside basis of certain held-for-sale entities.
Current report
1 Operating profit, income before income taxes, and provision for income taxes exclude results related to discontinued operations of $39,881, $39,250 and$9,489, respectively.
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Adjusted EBITDA 1
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1 Adjusted EBITDA is calculated on a total Company basis, including both continuing operations and discontinued operations.
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $36,502, the Industrial Paper Packaging segment of $5,265, and the All Other group of businesses of $194.
Current report
2 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivables in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.
Current report
3 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $1,220 and the Industrial Paper Packaging segment of $12,401, and a gain in the All Other group of businesses of $40.
Current report
4 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $562.
Current report
5 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $20,072 and the Industrial Paper Packaging segment of $218.
Current report
7 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(284), the Industrial Paper Packaging segment of $(2,552), and the All Other group of businesses of $(113).
Current report
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $11,057, the Industrial Paper Packaging segment of $6,631, 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 $4,317, the Industrial Paper Packaging segment of $22,603, and the All Other group of businesses of $1,148.
Current 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.
Current report
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $(280) and the Industrial Paper Packaging segment of $655.
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Removed paragraphs (100)
Previous report
•reduced supply chain disruptions;
Previous report
•improved productivity and cost containment, including cost savings from the Company’s investments;
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•leveraging strong cash flow and financial position;
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•costs, timing and effects of restructuring and portfolio simplification activities;
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•the Company’s ability to achieve its sustainability goals, including with respect to greenhouse gas emissions;
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•ability to receive regulatory approvals for the pending acquisition of Eviosys in a timely manner;
Previous report
Sonoco’s portfolio transformation strategy also includes significant divestitures. For example, in September 2024, the Company entered into agreements to divest two of its production facilities in China. 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.
Previous report
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 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 report
Third Quarter 2024 Compared with Third Quarter 2023
Previous report
Net sales for the third quarter of 2024 declined by $34.6 million or 2.0%, to $1.68 billion, compared to $1.71 billion in the same period last year. The decline was primarily driven by the absence of $39.5 million sales related to the Protexic divestiture in April 2024, the absence of $32.6 million sales related to the closure of a thermoformed food packaging plant in November 2023, lower sales of $20.6 million resulting from the accounting for the Company’s recycling operations as a procurement function effective January 1, 2024, and lower selling prices of $16.8 million. Partially offsetting these decreases were increases in overall volumes, including net sales from acquisitions, of $76.0 million over the prior-year period.
Previous report
GAAP operating profit for the third quarter of 2024 was $128.1 million, a decrease of 21.4% from the $162.9 million reported in the third quarter of 2023. The decrease in GAAP operating profit was primarily due to lower net sales of $52.0 million and a $30.0 million loss on the pending sale of two production facilities in China, partially offset by decreased manufacturing expenses of $56.7 million. Adjusted Operating Profit for the third quarter of 2024 was $210.7 million, a decrease of 0.9% from the $212.5 million reported for the same period in 2023.
Previous report
Cost of goods sold decreased by $29.0 million, or 2.2%, in the third quarter of 2024 compared with the same period last year. The decrease was primarily driven by lower manufacturing expense 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 ownership interest in RTS Packaging, higher depreciation expense, and higher employee-related costs.
Previous report
Gross profit decreased by $5.5 million, or 1.5%, in the third quarter of 2024 compared with the same period last year, primarily due to a decline in net sales. Gross profit as a percent of sales increased slightly to 21.4% from 21.3% in the prior-year quarter.
Previous report
Selling, general and administrative costs increased by $8.0 million, or 4.4%, in the third quarter of 2024 compared with the same period last year, primarilydue to higher year-over-year acquisition, integration and divestiture-related costs of $7.2 million and net incremental costs of $1.7 million associated with the prior year acquisitions of Inapel, the Chattanooga Mill, and the remaining ownership interest in RTS Packaging, and the current year divestiture of Protexic.
Previous report
Other income, net decreased $36.9 million in the third quarter of 2024, primarily due to the absence of a $44.0 million gain in the prior year from the step-up to fair value of the Company’s 35% ownership interest in RTS Packaging upon acquiring the remaining 65% ownership interest in September 2023.
Previous report
Non-operating pension costs were $0.5 million lower in the third quarter of 2024 compared to the third quarter of 2023, primarily attributable to lower year-over-year interest cost and 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 report
The following table summarizes Adjusted EBITDA attributable to each of the Company’s reportable segments and the All Other group of businesses during the third quarters of 2024 and 2023:
Previous report
1 Adjusted EBITDA is a non-GAAP financial measure. See the Company’s reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure in “Non-GAAP Financial Measures — Quarterly Reconciliations of GAAP to Non-GAAP Financial Measures” below.
Previous report
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 third quarters of 2024 and 2023:
Previous report
Segment sales remained flat compared to the corresponding prior year quarter as the absence of $32.6 million in sales related to the closure of a thermoformed food packaging plant in November 2023 and lower pricing of $21.4 million were offset by a $53.1 million increase in sales driven by higher net volumes, including an increase in sales from acquisitions.
Previous report
Segment operating profit and Adjusted EBITDA increased by 5.3% and 5.8%, respectively. The increase was largely due to higher productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, of $17.5 million, which was partially offset by lower price/cost and higher employee-related expenses. As a result, segment operating profit margin increased to 12.5% in the third quarter of 2024 from 11.9% in the same period last year.
Previous report
Segment sales increased 0.9% from the corresponding prior year quarter primarily due to the acquisitions of the remaining ownership interest in RTS Packaging and the Chattanooga Mill and the reduction in sales related to the treatment of the segment’s recycling operations as a procurement function effective January 1, 2024.
Previous report
Segment operating profit and Adjusted EBITDA decreased 6.4% and 3.1%, respectively, as continued price/cost pressures lowered profitability by $23.4 million and higher employee-related expenses were only partially offset by higher productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, of $17.7 million and the benefit of higher volumes, including acquisitions, of $8.4 million. As a result, segment operating profit margin decreased to 12% in the third quarter of 2024 from 13% in the same period last year.
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Nine Months Ended September 29, 2024 Compared with Nine Months Ended October 1, 2023
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Overview
Previous report
Net sales for the first nine months of 2024 decreased 4.1% to $4.9 billion, compared with $5.1 billion in the same period last year. The decline was primarily attributable to the absence of $90.5 million in sales related to the Protexic divestiture in April 2024, the absence of $73.6 million in sales related to the closure of a thermoformed food packaging plant in November 2023, lower sales of $76.8 million resulting from the accounting for the Company’s recycling operations as a procurement function beginning January 1, 2024, and lower pricing of $106.3 million. Partially offsetting these decreases was an increase in overall volume, including net sales from acquisitions, of $159.2 million over the prior-year period.
Previous report
GAAP operating profit for the first nine months of 2024 was $381.0 million, a decrease of 34.4% from the $580.4 million reported in the same period last year. The decrease in GAAP operating profit was primarily due to lower net sales of $337.8 million, a $30.0 million loss in the current period on the pending sale of two production facilities in China, the absence of a net $77.5 million benefit from the sale of the Company’s timberland properties and the divestitures of the S3 and U.S. BulkSak businesses in 2023, and additional acquisition, integration and divestiture-related costs of $25.4 million in the first nine months of 2024, partially offset by decreased manufacturing expenses of $297.9 million. Adjusted operating profit for the first nine months of 2024 was $579.6 million, a decrease of 9.0% from the $636.9 million reported for the same period in 2023.
Previous report
GAAP net income attributable to Sonoco for the first nine months of 2024 decreased to $206.9 million, or $2.09 per diluted share, compared to $393.7 million, or $3.98 per diluted share, reported for the same period of 2023. This decrease was primarily due to a decrease in GAAP operating profit as described above and the absence of a $44.0 million gain from the step-up to fair value of the Company’s 35% ownership interest in RTS Packaging upon acquiring the remaining 65% ownership interest in September 2023, partially offset by a reduction in income tax expense of $61.2 million. Adjusted net income attributable to Sonoco and Adjusted diluted earnings per share for the nine-month period ended September 29, 2024 decreased 7.7% to $386.1 million, or $3.89 per diluted share, from $418.5 million, or $4.24 per diluted share, in the nine-month period ended October 1, 2023.
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Costs and Expenses
Previous report
Cost of goods sold decreased $166.2 million, or 4.1%, primarily related to the sale of Protexic and improved productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, partially offset by cost of sales related to the acquisitions of Inapel, the Chattanooga Mill, and the remaining ownership interest in RTS Packaging.
Previous report
Gross profit decreased $42.4 million, or 3.9%, year over year, while the Company’s gross profit margin percentage remained flat at 21.3% for the first nine months of 2024, compared to the prior-year period. The decrease in gross profit was driven by volume and price declines, partially offset by higher productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives and positive margin related to the acquisitions of Inapel, the Chattanooga Mill, and the remaining ownership interest in RTS Packaging.
Previous report
Selling, general and administrative costs for the first nine months of 2024 increased $44.9 million, or 8.3%, year over year. The increase was largely driven by higher year-over-year acquisition, integration and divestiture-related costs of $25.4 million, and net incremental costs of $13.6 million associated with the prior year acquisitions of Inapel, the Chattanooga Mill, and the remaining ownership interest in RTS Packaging, and the current year divestiture of Protexic.
Previous report
Restructuring/Asset impairment charges totaled $59.1 million in the first nine months of 2024, compared with $53.0 million of net charges in 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 report
Loss on divestiture of business and other assets of $27.3 million in the first nine months of 2024 primarily reflects a loss on the pending sale of two production facilities in China, partially offset by gains from the Company’s divestitures of Protexic and the S3 business. Gain on divestiture of business and other assets of $78.8 million in the first nine months of 2023 reflects net gains from the sale of the Company’s timberland properties and the divestitures of its S3 and U.S. BulkSak businesses. 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 report
Other income, net was $5.9 million in the first nine months of 2024, reflecting a gain upon the remeasurement to fair value of one of the Company’s investments in affiliates. Other income, net was $36.9 million in the first nine months of 2023, reflecting a gain of $44.0 million resulting from the remeasurement of the Company’s previously held ownership interest in RTS Packaging to fair value, partially offset by a loss of $7.1 million from the settlement of a contract associated with the acquisition of the Chattanooga Mill that was determined to have unfavorable terms given market conditions at the time of the acquisition. 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.
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Non-operating pension costs remained flat year over year. 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 report
GAAP net interest expense for thefirst nine months of 2024 increased to $109.4 million, compared with $94.7 million during the first nine months of 2023. The increase of $14.7 million was primarily due to higher interest from financing transactions relating to the pending Eviosys acquisition, partially offset by lower year-over-year average debt balances and interest income from the Company’s cross-currency swaps.
Previous report
The effective tax rates reflected in GAAP net income and Adjusted net income attributable to Sonoco in the first nine months of 2024 were 24.6% and 24.0%, respectively, compared with 24.8% and 24.4%, respectively, in the prior-year period. The decrease in the effective tax rates on GAAP and Adjusted net income attributable to Sonoco was primarily due to favorable provision-to-return adjustments.
Previous report
Reportable Segments
Previous report
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 nine months of 2024 and 2023:
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Reworded paragraphs (54)
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,” “develop,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” “is designed to,” “likely,” “maintain,” “may,” “might,” “objective,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “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 “aim,” “anticipate,” “assume,” “believe,” “can,” “committed,” “consider,” “continue,” “could,” “develop,” “estimate,” “expect,” “forecast,” “foresee,” “future,” “goal,” “guidance,” “intend,” “is designed to,” “likely,” “maintain,” “may,” “might,” “objective,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “strategy,” “target,” “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
•the effects of economic downturns, inflation, volatility and other macroeconomic factors on the Company and its industry, including effects on consumers and customers;
Current wording
•the effects of economic downturns, tariffs or other changes in trade policy, inflation, volatility and other macroeconomic factors on the Company and its industry, including the Company’s ability to manage such matters and their effects on consumers and customers;
Previous wording
•the Company’s proposed acquisition of Titan Holdings I B.V. (“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 wording
•the Company’s acquisition of Titan Holdings I B.V. (“Eviosys”) and the anticipated benefits of the acquisition, including with respect to market leadership, strategic alignment, customer relationships, sustainability, innovation and cost synergies;
Previous 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 ownership interest in RTS Packaging, LLC (“RTS Packaging”), a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”), and Inapel Embalagens Ltda. (“Inapel”), 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”), the pending sale of two of its production facilities in China, and the potential divestitures of the Company’s ThermoSafe and thermoformed and flexible packaging (“TFP”) businesses;
Current wording
•effects and timing of, and anticipated costs, synergies and gains resulting from our other contemplated, pending, and completed acquisitions, including the Company’s acquisitions of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging, the remaining ownership interest in RTS Packaging, LLC, a paper mill in Chattanooga, Tennessee, and Inapel Embalagens Ltda.;
Previous wording
•the Company’s capital structure, including the incurrence of debt and the refinancing and repayment of debt;
Current wording
•the Company’s capital structure, including the incurrence of debt and the repayment of debt;
Previous wording
•ability to manage the mix of business and execute on the Company’s portfolio simplification strategy, including with respect to divestitures such as the potential divestitures of its ThermoSafe and TFP businesses;
Current wording
•ability to manage the mix of business and execute on the Company’s portfolio simplification strategy, including with respect to divestitures, such as the potential divestiture of its ThermoSafe business;
Previous wording
•ability to satisfy closing conditions and close acquisitions, including the pending acquisition of Eviosys, and to finance such acquisitions on acceptable terms;
Current wording
•ability to satisfy closing conditions and close acquisitions, and to finance such acquisitions on acceptable terms;
Previous 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;
Current wording
•ability to successfully integrate newly acquired businesses, including Eviosys, into the Company’s operations, retain key employees, and realize expected cost savings, synergies and other anticipated benefits relating thereto within the expected time period, or at all;
Previous wording
•the potential impact of the consummation of newly acquired businesses, including Eviosys, on relationships with clients and other third parties;
Current wording
•the potential impact of acquisitions, including the acquisition of Eviosys, on relationships with customers and other third parties;
Previous wording
•availability, transportation and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine as well as the economic sanctions related thereto, and the ongoing conflicts in the Middle East), and the Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;
Current wording
•availability, transportation and pricing of raw materials, energy and transportation, including the impact of changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine as well as the economic sanctions related thereto, and the ongoing conflicts in the Middle East), and the Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;
Previous wording
•consumer demand for products and changing consumer preferences, including changes related to inflation and other macroeconomic factors;
Current wording
•consumer demand for products and changing consumer preferences, including changes related to inflation, tariffs, and other macroeconomic factors;
Previous wording
•ability to improve margins and leverage cash flows and financial position;
Current wording
•ability to maintain or improve margins and leverage cash flows and financial position;
Previous wording
•effects of environmental laws and regulations, including with respect to climate change and emissions reporting and the effectiveness of the final rules adopted by the Securities and Exchange Commission to enhance public company climate disclosures;
Current wording
•effects of environmental laws and regulations, including with respect to climate change and emissions reporting;
Previous wording
•ability to meet environmental, sustainability and other social and governmental goals, including with respect to greenhouse gas emissions, and challenges in implementation thereof;
Current wording
•ability to meet environmental, sustainability and other similar goals;
Previous wording
•actions of domestic or foreign government agencies, changes in laws and regulations affecting the Company, and increased costs of compliance;
Current wording
•actions of domestic or foreign government agencies, the impact of new and evolving laws, regulations, rules and standards affecting the Company, and increased costs of compliance;
Previous wording
•economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine and the ongoing conflict in Israel and Gaza), public health events, terrorist activities, and natural disasters; and
Current wording
•economic disruptions resulting from changing tariff policies and trade wars, war, and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East), public health events, terrorist activities, and natural disasters; and
Previous wording
Sonoco is a multi-billion dollar global designer, developer, and manufacturer of a variety of highly-engineered and sustainable packaging products serving multiple end markets. As of September 29, 2024, the Company had more than 300 locations in 33 countries, serving some of the world’s best-known brands in some 85 nations. 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.
Current wording
Sonoco is now a multi-billion dollar global designer, developer, and manufacturer of a variety of highly engineered and sustainable packaging products serving multiple end markets serving some of the world’s best-known brands around the globe from approximately 285 locations in 40 countries. 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.
Previous wording
Sonoco competes in multiple product categories, with the majority of the Company’s revenues arising from products and services sold to consumer and industrial products companies for use in the packaging of their products for sale or shipment. The Company also manufactures uncoated recycled paperboard for both internal use and open market sale. Each of the Company’s operating units has its own sales staff and maintains direct sales relationships with its customers.
Current wording
Sonoco competes in multiple product categories, with the majority of the Company’s revenues attributable to products and services sold to consumer and industrial products companies for use in the packaging of their products for sale or shipment. The Company also manufactures uncoated recycled paperboard for both internal use and open market sale. Each of the Company’s operating units has its own sales staff and maintains direct sales relationships with its customers.
Previous wording
Sonoco’s goal is to increase its long-term profitability and return capital to its 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 all of the issued and outstanding equity interests in Eviosys, a leading European manufacturer of food cans, ends and closures, for approximately €3.6 billion (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 ownership 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 wording
Sonoco’s goal is to increase its long-term profitability and return capital to shareholders. Over the past several years, we have simplified our portfolio around fewer, bigger businesses, which has reduced operating complexity and improved agility. On December 4, 2024, Sonoco completed the acquisition of Eviosys, Europe’s leading food cans, ends and closures manufacturer, from KPS Capital Partners, LP, for net cash consideration of approximately $3.8 billion. The transaction advances Sonoco’s portfolio transformation strategy to simplify and realign its portfolio and position the Company for long-term growth and value creation. The transaction, the largest in the Company’s history, expands Sonoco’s global leadership in metal food can and aerosol packaging and facilitates our ability to partner with global customers to advance innovation and sustainability in metal packaging offerings. During 2025, Eviosys will complete its transition to the Sonoco brand and operate under the Consumer Packaging segment.
Previous wording
In addition to the completed divestitures discussed above, the Company has initiated reviews of strategic alternatives for ThermoSafe, its leading temperature assured packaging business, and TFP, its leading thermoformed and flexible packaging business (together, the “Potential Divestitures”). On a standalone basis, ThermoSafe, which is part of the All Other group of businesses, had revenue of $283 million in 2023. On a standalone basis, TFP, which was formed by integrating the Company’s flexible packaging and thermoforming packaging businesses within the Consumer Packaging segment effective as of January 1, 2024, had revenue of $1.3 billion in 2023. The Company expects to complete its review of strategic alternatives for TFP in the fourth quarter of 2024 and to complete its review of strategic alternatives for ThermoSafe by the end of the third quarter of 2025. The Company intends to use the net proceeds from the Potential Divestitures, if completed, to reduce its indebtedness if the pending Eviosys acquisition closes, or to pursue other strategic initiatives if the pending Eviosys acquisition does not close.
Current wording
As previously disclosed, the Company initiated a review of strategic alternatives for ThermoSafe, its leading temperature-assured packaging business. On a standalone basis, ThermoSafe, which is part of the All Other group of businesses, had revenue of $245 million in 2024. The Company expects to complete its review of strategic alternatives for ThermoSafe in the second half of 2025.
Previous wording
The Company believes that these completed and potential divestitures will enable greater strategic clarity and operational focus while also generating proceeds to fund deleveraging and capital investments in core businesses.
Current wording
The Company believes that these completed and potential divestitures will enable greater strategic and operational focus while also generating proceeds to fund deleveraging and further focus capital investments in our core Consumer Packaging and Industrial Paper Packaging businesses.
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 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 from procurement savings, production efficiencies, and fixed cost reduction initiatives, as well as strategic pricing initiatives intended 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, the Company continues to work on commercial, operational, and supply chain excellence programs to shift the mix of its business towards higher-valued products and increase overall productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, as well as strategic pricing initiatives intended to better capture input costs and the value of the services provided.
Previous wording
The Company’s financial statements are prepared in conformity with generally accepted accounting principles (“GAAP”). Sonoco’s management considers a variety of both GAAP and non-GAAP financial and operating measures in assessing the Company’s financial performance. The key GAAP measures used are net sales, operating profit, gross profit margin, net income attributable to Sonoco and diluted earnings per share. The key non-GAAP measures used are Adjusted operating profit, Adjusted net income attributable to Sonoco, Adjusted diluted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin. For information about the Company’s use of non-GAAP measures and reconciliations of these measures to the most directly comparable GAAP measures see “Non-GAAP Financial Measures” below.
Current wording
The Company’s financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Sonoco’s management considers a variety of both GAAP and non-GAAP financial and operating measures in assessing the Company’s financial performance. The key GAAP measures used are net sales, operating profit, gross profit margin, net income attributable to Sonoco and diluted earnings per share. The key non-GAAP measures used are Adjusted operating profit, Adjusted net income attributable to Sonoco, Adjusted diluted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin. For information about the Company’s use of non-GAAP measures and reconciliations of these measures to the most directly comparable GAAP measures see “Non-GAAP Financial Measures” below.
Previous wording
GAAP net income attributable to Sonoco for thethird quarter of 2024 decreased to $50.9 million, or $0.51 per diluted share, compared to $130.7 million, or $1.32 per diluted share, for the same period of 2023. This decrease was primarily due to a decrease in GAAP operating profit as described above, the absence of a $44.0 million gain from the step-up to fair value of the Company’s 35% ownership interest in RTS Packaging upon acquiring the remaining 65% ownership interest in September 2023, and additional interest expense of $26.0 million primarily related to the financing of the pending Eviosys acquisition. These decreases were partially offset by a reduction in income tax expense of $18.2 million. Adjusted net income attributable to Sonoco and Adjusted diluted earnings per share for the third quarter of 2024 were $147.9 million ($1.49 per diluted share), compared with $144.9 million ($1.46 per diluted share) for the same period in 2023.
Current wording
GAAP net income attributable to Sonoco for the first quarter of 2025 decreased to $54.4 million, or $0.55 per diluted share, compared to $65.2 million, or $0.66 per diluted share, for the first quarter of 2024. This decrease was primarily due to the increase in GAAP operating profit as described above, more than offset by an increase in net interest expense, a decrease in GAAP Net Income from discontinued operations, and an increased provision for income taxes as described below. Adjusted net income attributable to Sonoco and Adjusted diluted earnings per share for the first quarter of 2025 were $136.8 million ($1.38 per diluted share), compared with $111.5 million ($1.12 per diluted share) for the same period in 2024.
Previous wording
Restructuring/Asset impairment charges totaled $8.2 million in the third quarter of 2024, compared with $18.1 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.
Current wording
Restructuring/Asset impairment charges totaled $13.6 million in the first quarter of 2025, compared with $31.0 million during the same period last year. The higher cost in the prior year was primarily related to the closure of the Company’s paper mill in Sumner, Washington during the first quarter of 2024. Additional information regarding restructuring and asset impairment charges is provided in Note 6 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Loss on divestiture of business and other assets of $31.8 millionin the third quarter of 2024 primarily reflects a loss on the pending sale of two production facilities in China. Loss on divestiture of business and other assets of$0.5 million in the second quarter of 2023 reflectsa loss 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.
Current wording
Loss on divestiture of business and other assets of $4.2 million in the first quarter of 2025 reflects a $5.4 million loss from the sale of the Company’s tube and core operations in Venezuela, partially offset by a $1.2 million gain from the sale of a small construction tube operation in France, both part of the Industrial Paper Packaging segment. See Note 4 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 third quarter of 2024 increased to $55.6 million, compared with $29.7 million during the third quarter of 2023. The increase of $26.0 million was primarily due to higher interest from financing transactions relating to the pending Eviosys acquisition.
Current wording
Net interest expense for the first quarter of 2025 increased to $48.7 million, compared with $27.0 million during the first quarter of 2024. The increase was primarily due to higher year-over-year debt levels resulting from financing transactions related to the Eviosys acquisition.
Previous wording
The effective tax rates reflected in GAAP net income and Adjusted net income attributable to Sonoco in the third quarter of 2024 were 30.4% and 21.3%, respectively, compared with 23.6% and 22.7%, respectively, in the corresponding prior year quarter. The increase in the GAAP effective tax rate was primarily due to the absence of a tax benefit on a one-time loss in China as well as an unfavorable adjustment on acquisition costs related to the pending Eviosys acquisition. The effective tax rate on Adjusted net income attributable to Sonoco was lower primarily due to favorable provision-to-return adjustments.
Current wording
The effective tax rates for continuing operations reflected in GAAP net income and Adjusted net income attributable to Sonoco in the first quarter of 2025 were 30.9% and 25.7%, respectively, compared with 18.6% and 26.2%, respectively, in the corresponding prior year quarter. The increase in the GAAP effective tax rate was primarily due to an adjustment to record deferred tax liabilities on certain entities considered to be held for sale, as well as discrete non-GAAP charges for which no tax benefit will be realized.
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 third 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 first quarters of 2025 and 2024:
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 third 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 first quarters of 2025 and 2024:
Previous wording
The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper, steel and plastic containers; metal and peelable membrane ends, closures, and components; thermoformed plastic trays and applications; and high-barrier flexible packaging. These products primarily serve the consumer staples market, focused on food, beverage, household, personal, and pharmaceutical products.
Current wording
The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper, steel and plastic containers; and metal and peelable membrane ends, closures, and components. These products primarily serve the consumer staples market, focused on food, beverage, household, personal, and pharmaceutical products.
Previous wording
Sales declined 26.3% from the same quarter of the prior year primarily due to the sale of Protexic.
Current wording
Sales declined from the same period of the prior year primarily due to the sale of the Protexic business and the decline in volume/mix. Pricing was flat year over year.
Previous wording
All Other operating profit and Adjusted EBITDA dropped by 15.9% and 17.8%, respectively, in the third quarter of 2024 compared to the same period last year, primarily due to the sale of Protexic and negative price/cost, partially offset by higher productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives. As a result, operating margin increased to 16.3% in the third quarter of 2024 compared to 14.2% in the same quarter last year.
Current wording
All Other operating profit decreased in the first quarter of 2025 compared to the same period last year, primarily due to volume declines in our Industrial Plastics businesses and the sale of the Protexic business in April 2024. Price/cost was also a headwind from 2024, but this impact was largely offset by higher productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives. As a result, operating profit margin increased to 14.0% in the first quarter of 2025 compared to 12.8% in the same period last year.
Previous wording
To assess and communicate the financial performance of the Company, Sonoco’s management uses, both internally and externally, certain financial performance measures that are not in conformity with GAAP. These “non-GAAP” financial measures reflect adjustments to the Company’s GAAP operating results to exclude amounts, including the associated tax effects, relating to:
Current wording
The Company uses certain financial performance measures, both internally and externally, that are not in conformity with GAAP (referred to as “non-GAAP financial measures”) to assess and communicate the financial performance of the Company. These “non-GAAP” financial measures, which are identified using the term “Adjusted” (for example, “Adjusted Operating Profit,” “Adjusted Net Income Attributable to Sonoco,” and “Adjusted Diluted EPS”) reflect adjustments to the Company’s GAAP operating results to exclude amounts, including the associated tax effects, relating to:
Previous wording
The Company’s management believes the exclusion of these amounts improves the period-to-period comparability and analysis of the underlying financial performance of the business. Non-GAAP figures are identified using the term “Adjusted,” for example, “Adjusted Operating Profit,” “Adjusted Net Income Attributable to Sonoco” and “Adjusted Diluted EPS.” More information about the Company’s use of non-GAAP financial measures is provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, under Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Use of Non-GAAP Financial Measures.”
Current wording
The Company’s management believes the exclusion of these amounts improves the period-to-period comparability and analysis of the underlying financial performance of the business. More information about the Company’s use of non-GAAP financial measures is provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, under Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Non-GAAP Financial Measures.”
Previous wording
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 the three-month period ended September 29, 2024 and the three-month period ended October 1, 2023.
Current wording
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 the three-month periods ended March 30, 2025 and March 31, 2024.
Previous wording
The Company does not calculate net income by segment; therefore, Adjusted EBITDA by segment is reconciled to the closest GAAP measure of segment profitability, segment operating profit. Segment operating profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with Accounting Standards Codification (“ASC”) 280 - “Segment Reporting,” as prescribed by the Financial Accounting Standards Board.
Current wording
The Company does not calculate net income by segment; therefore, Adjusted EBITDA by segment is reconciled to the closest GAAP measure of segment profitability, segment operating profit. Segment operating profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with Accounting Standards Codification 280, “Segment Reporting,” as prescribed by the Financial Accounting Standards Board.
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; 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.
Current wording
Segment results, which are reviewed 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, except for costs related to discontinued operations. Total operating profit is composed of the sum of segment and All Other operating profit plus certain items that have been allocated to Corporate, including amortization of acquisition intangibles; restructuring/asset impairment charges; changes in LIFO inventory reserves; acquisition, integration and divestiture-related costs; gains/losses from the sale of businesses or other assets; gains/losses on derivatives; and certain other items that were excluded from segment and All Other operating profit.
Previous wording
5 Included in Corporate are losses on the divestiture of business associated with the Industrial Paper Packaging segment of $29,965 related to the pending sale of two production facilities in China, and the All Other group of businesses of $1,805 related to the sale of Protexic.
Current wording
6 Included in Corporate are losses on the divestiture of businesses associated with the Industrial Paper Packaging segment of $4,183 related to the sale of a production facility in France and the entirety of our business in Venezuela.
Previous wording
Cash generated from operations for the first nine months of 2024 was $437.6 million, compared with $616.9 million in the same period of 2023, a year-over-year decrease of $179.2 million. GAAP net income decreased by $186.6 million year over year as described in the “Results of Operations” section above. Net working capital used $115.8 million of cash in the first nine months of 2024, while providing $67.3 million in the same period last year, for a year-over-year decrease in operating cash flow of$183.2 million. Accounts receivable used $98.3 million more cash during the first nine 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 offsetting the impact of lower revenues year over year. Inventory was a use of cash of $6.7 million in the first nine months of 2024, while last year was a source of cash of $277.4 million. This lower year-over-year use of cash was expected as the Company ended 2022 with a substantial inventory position driven by pandemic-related supply chain uncertainty. Accounts payable was a source of cash of $73.5 million in the first nine months as compared to a use of cash of $125.7 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 inventories and review payment terms with customers and suppliers to address risk and balance economic benefit. Changes in accrued expenses and other assets and liabilities provided cash totaling $43.6 million inthe nine-month period ended September 29, 2024, and used $9.5 million of cash in the same period last year. The$53.2 million lower use of cash in the current year was largely driven by the lower year-over-year payout of management incentive compensation.
Current wording
Operating activities used cash of $208.1 million in the first three months of 2025, while they provided cash of $166.2 million in the same period of 2024, a year-over-year decrease of $374.3 million. GAAP net income decreased by $10.8 million year over year as described in the “Results of Operations” section above. Net working capital used $309.4 million of cash in the first three months of 2025, while providing $0.8 million in the same period of 2024, for a year-over-year decrease in operating cash flow of $310.1 million. Accounts receivable used $21.0 million more cash during the first three months of 2025 than in the same period of 2024 as a result of the impact of the changing mix in customer payment terms combined with higher revenues year over year. Inventory was a use of cash of $110.2 million in the first three months of 2025, while it was a source of cash of $18.4 million in the same period of 2024 due to higher overall inventory levels, mainly in tinplate steel, the impacts of inflation, and seasonality. Accounts payable used cash of $134.9 million in the first three months as compared to a provision of cash of $25.7 million in the same period of 2024 due to timing of purchases and scheduled payments. The Company has continued to actively manage inventories and review payment terms with customers and suppliers to address risk and balance economic benefit. Changes in accrued expenses and other assets and liabilities used cash totaling $100.2 million in the first three months of 2025 and $7.1 million in the same period of 2024, for a year-over-year increase in use of cash of $93.2 million. The primary drivers contributing to the change include the higher year-over-year payments related to management incentive compensation of $24.3 million, interest of $22.1 million, and the Company’s restructuring initiatives of $16.8 million.
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Previous report — wording carried elsewhere
The following discussion provides a review of results for the nine-month period ended September 29, 2024 compared with the nine-month period ended October 1, 2023.
Previous report — wording carried 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 nine months of 2024 and 2023:
Previous report — wording carried 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 nine months of 2024 and 2023:
Previous report — wording carried elsewhere
Adjusted EBITDA and Adjusted EBITDA Margin
Previous report — wording carried 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 the nine-month period ended September 29, 2024 and the nine-month period ended October 1, 2023.
Previous report — wording carried elsewhere
Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS
Previous report — wording carried elsewhere
Adjusted EBITDA and Adjusted EBITDA Margin
Previous report — wording carried elsewhere
On April 15, 2024, as a result of the 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 Company terminated its swap agreements and received a net 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.”