Sonoco Reports First Quarter 2024 Results

Sonoco Products Company (“Sonoco” or the “Company”), one of the largest sustainable global packaging companies, reported financial results for its first quarter ended March 31, 2024.

Summary

• Generated $166 million of operating cash flow and $80 million of Free Cash Flow
• Achieved net income attributable to Sonoco of $65 million, Adjusted EBITDA of $245 million, diluted earnings per share of $0.66 and diluted Adjusted earnings per share of $1.12; higher productivity of $51 million partially offset price/cost pressures and lower volumes
• Completed the sale of Protective Solutions on April 1, 2024, as part of our strategy to simplify our portfolio and used the majority of the $82 million cash proceeds to pay down debt
• Revised Adjusted EPS and Adjusted EBITDA guidance to reflect the completed sale of Protective Solutions and reaffirmed operating cash flow guidance
• Increased the quarterly dividend on April 17, 2024 for the 41^st consecutive year to $0.52 per share
• Entered a Virtual Power Purchase Agreement (“VPPA”) to contract a significant portion of Sonoco’s expected U.S. electricity consumption in 2025 and support Sonoco’s emissions reduction goals
• Released our 2023 Corporate Sustainability Report detailing progress on sustainability initiatives

First Quarter 2024 Consolidated Results

• Net sales decreased 5% to $1.6 billion driven by lower pricing and the treatment of recycling operations as a procurement function beginning January 1, 2024; volumes remained flat as lower volumes offset the benefit of acquisitions
• GAAP operating profit decreased to $112 million primarily due to the absence of gains ($72 million) recognized in Q1 2023 related to the sales of the Company’s timberland properties and Sonoco Sustainability Solutions; lower volumes and price/cost were partially offset by higher productivity
• Effective tax rates on GAAP and Adjusted Earnings were 21.3% and 25.6%, respectively, in Q1 2024 compared to 24.3% and 24.8%, respectively, in Q1 2023
• GAAP net income attributable to Sonoco decreased to $65 million resulting in GAAP EPS (diluted) of $0.66
• Adjusted Earnings decreased to $111 million resulting in Adjusted EPS (diluted) of $1.12
• Adjusted operating profit and Adjusted EBITDA decreased to $176 million and $245 million, respectively, due to lower volumes in the Consumer Packaging (“Consumer”) segment and unfavorable price/cost in the Industrial Packaging (“Industrial”) segment, which were partially offset by higher productivity across the portfolio

“Sonoco delivered first quarter results in line with our expectations”, said Sonoco’s President and CEO, Howard Coker. “While the overall demand environment remains muted and price/cost headwinds persist, focused execution and operating discipline delivered $51 million of productivity from value creating capital investments and business simplification initiatives over the past several years. On the strategic front, we continued to make notable progress on portfolio alignment with the sale of our Protective Solutions business, integration of our flexibles and thermoformed businesses, and strengthening our strategic pipeline of both organic and inorganic investment opportunities.”

First Quarter 2024 Segment Results

(Dollars in millions except per share data)

Sonoco reports its financial results in two reportable segments: Consumer and Industrial, with all remaining businesses reported as All Other.

Consumer Packaging

• Effective January 1, 2024, the Company’s flexible packaging and thermoformed packaging businesses were integrated within the Consumer segment to streamline operations, enhance customer service, and better position the business to accelerate growth
• Consumer net sales were down 5% to $911 million as volumes continued to be impacted by lower consumer purchases from inflationary pricing impacts, primarily in snacks and confectionary markets. Metal Packaging experienced year over year growth in aerosol volumes and declines in food volumes
• Consumer operating profit decreased 4% to $93 million due to lower volumes and negative price/cost, partially offset by continued strong productivity

Industrial Paper Packaging

• Effective January 1, 2024, we began conducting our recycling operations as a procurement function with recycling sale margins reflected only in cost of sales
• Industrial net sales decreased 4% to $593 million driven by lower index-related pricing, continued weakness in global converted products, and the conduct of recycling as a procurement function, which was partially offset by higher demand in paper and revenues from acquisitions
• Continued price/cost pressures were partially offset by strong productivity and the benefit from acquisitions which resulted in an operating profit margin of 11% and Adjusted EBITDA margin of 16%

All Other

• Net sales declined 14% due to lower volumes in temperature assured packaging from product transitions
• Operating profit and Adjusted EBITDA declined by 24% and 20%, respectively, from lower volumes and negative price/cost, partially offset by higher productivity

Balance Sheet and Cash Flow Highlights

• Cash and cash equivalents were $172 million as of March 31, 2024, compared to $152 million as of December?31, 2023
• Total debt was $3.1 billion as of March 31, 2024, essentially flat compared to December 31, 2023
• On March 31, 2024, the Company had available liquidity of $1.1 billion, including the undrawn availability under its revolving credit facility
• Cash flow from operating activities for the first quarter 2024 was $166 million, compared to $98 million in the same period of 2023
• Capital expenditures, net of proceeds from sales of fixed assets, for the first three months of 2024 were $86 million, compared to $12 million for the same period last year, which included net proceeds from the sale of our timberland properties of $71 million
• Free Cash Flow for the first three months of 2024 was $80 million compared to $86 million for the same period of 2023. See the Company’s definition of Free Cash Flow, the explanation as to why it is used, and the reconciliation to net cash provided by operating activities later in this release
• Dividends paid during the quarter ended March 31, 2024 increased to $50 million compared to $48 million for the same quarter of the prior fiscal year

Guidance⁽¹⁾ 

Second Quarter 2024

• Adjusted EPS⁽²⁾: $1.25 to $1.35

Full Year 2024

• Adjusted EPS⁽²⁾: $5.00 to $5.30
• Cash flow from operating activities: $650 million to $750 million
• Adjusted EBITDA: $1,050 to $1,090

Commenting on the Company’s outlook, Coker said, “At the midpoint of second quarter 2024 guidance, we expect sequential adjusted earnings per share improvement of 16% over first quarter results from increased sales in metal packaging and trade paper and continued strong productivity across all businesses. We will continue to make progress on our portfolio simplification efforts while remaining focused on financial discipline and returning capital to our shareholders.”

Effective January 1, 2024, the Company integrated its flexible packaging and thermoformed packaging businesses within the Consumer 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. Beginning this reporting period, the Company’s consumer thermoformed businesses moved from the All Other group of businesses to the Consumer segment. The Company’s Industrial segment was not affected by these changes.

For full results click here.

About Sonoco

Founded in 1899, Sonoco (NYSE:SON) is a global provider of packaging products. With net sales of approximately $7.3 billion in 2022, the Company has approximately 22,000 employees working in more than 300 operations around the world, serving some of the world’s best-known brands. With our corporate purpose of Better Packaging. Better Life., Sonoco is committed to creating sustainable products, and a better world, for our customers, employees and communities. The Company ranked first in the Packaging sector on Fortune’s World’s Most Admired Companies for 2022 as well as being included in Barron’s 100 Most Sustainable Companies for the fourth consecutive year. For more information on the Company, visit our website at www.sonoco.com.

Contact:

Lisa Weeks – Media Relations – lisa.weeks@sonoco.com – (843) 383-7524

Source: Sonoco Products Company