Sonoco(SON) - 2025 Q2 - Quarterly Results

Executive Summary This section provides a high-level overview of Sonoco's strong Q2 2025 financial performance, driven by strategic acquisitions, divestitures, and operational improvements Q2 2025 Performance Highlights Sonoco reported strong financial results for Q2 2025, driven by acquisitions and productivity gains. Net sales increased significantly, GAAP net income and EPS saw substantial growth, largely due to the TFP divestiture. Adjusted metrics also showed healthy year-over-year improvement, and the company reduced debt using divestiture proceeds - Second quarter net sales grew to $1.9 billion, a 49.4% increase from the prior-year quarter, primarily due to acquisitions[5] - GAAP net income attributable to Sonoco was $493 million, up from $91 million in Q2 2024, with $425 million of the increase attributed to the sale of the TFP businesses[5] - Adjusted net income attributable to Sonoco improved by 7.4% year-over-year to $136 million, and adjusted diluted EPS reached $1.37[5] - Adjusted EBITDA for the second quarter was $328 million, a 25.1% increase from the prior-year quarter[5] - Total debt and net debt were reduced by approximately $1.7 billion and $1.9 billion, respectively, during the quarter, utilizing divestiture proceeds and operating cash flow[5] Consolidated Financial Results This section details Sonoco's GAAP and non-GAAP financial performance for Q2 2025, highlighting significant growth driven by acquisitions, divestitures, and operational efficiencies GAAP Results Sonoco's GAAP consolidated results for Q2 2025 showed significant growth across key metrics compared to Q2 2024, largely influenced by the divestiture of TFP and the acquisition of Eviosys GAAP Results | GAAP Results (Millions USD, except EPS) | June 29, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $1,910 | $1,279 | 49% | | Operating profit | $176 | $96 | 83% | | Net income attributable to Sonoco | $493 | $91 | 443% | | EPS (diluted) | $4.96 | $0.92 | 439% | Non-GAAP Adjusted Results Adjusted financial metrics for Q2 2025 also demonstrated strong year-over-year improvements, reflecting the company's underlying operational performance excluding certain one-time or non-recurring items Non-GAAP Results | Non-GAAP Results (Millions USD, except EPS) | June 29, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted operating profit | $247 | $142 | 74% | | Adjusted EBITDA | $328 | $262 | 25% | | Adjusted net income attributable to Sonoco | $136 | $127 | 7% | | Adjusted EPS (diluted) | $1.37 | $1.28 | 7% | Key Drivers of Performance The significant increase in net sales was primarily driven by the Eviosys acquisition and price increases. Operating profit benefited from the Metal Packaging EMEA business, a positive price/cost environment, lower restructuring costs, and strong productivity, despite some negative product mix and macroeconomic pressures - Net sales increase of 49.4% was driven by the acquisition of Metal Packaging EMEA (Eviosys), price increases to offset inflation and tariffs, and favorable foreign exchange rates[7] - GAAP operating profit increased due to contributions from Metal Packaging EMEA, a positive price/cost environment, reduced restructuring costs, and productivity gains from procurement savings, production efficiencies, and fixed cost reductions[7] - Overall sales volumes (excluding Eviosys) were essentially flat, with solid Consumer Packaging segment volume growth offsetting declines in Industrial Paper Packaging[7] - Effective tax rates on GAAP net income and adjusted net income were 37.3% and 25.6% respectively in Q2 2025, compared to 23.3% and 26.2% in Q2 2024[7] Segment Performance This section analyzes the financial performance of Sonoco's Consumer Packaging, Industrial Paper Packaging, and All Other segments, highlighting key drivers and changes in sales and profitability Consumer Packaging Segment The Consumer Packaging segment experienced substantial growth in Q2 2025, primarily due to the Eviosys acquisition and strong performance in U.S. Metal Packaging, leading to significant increases in net sales, operating profit, and adjusted EBITDA Consumer Segment | Consumer Segment (Millions USD, except margins) | June 29, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $1,227 | $583 | 110% | | Segment operating profit | $160 | $74 | 117% | | Segment operating profit margin | 13% | 13% | 0 pp | | Segment Adjusted EBITDA | $213 | $99 | 115% | | Segment Adjusted EBITDA margin | 17% | 17% | 0 pp | - Consumer segment net sales grew 110%, driven by sales from Metal Packaging EMEA (Eviosys acquisition), strong year-over-year volume growth in Metal Packaging U.S., and favorable foreign exchange rates[12] - Segment operating profit and adjusted EBITDA grew primarily due to profits from Metal Packaging EMEA, productivity improvements, and volume/mix gains in the U.S. metal packaging business[12] Industrial Paper Packaging Segment The Industrial Paper Packaging segment saw a slight decrease in net sales due to volume declines and divestitures, but improved its operating profit and adjusted EBITDA margins through positive price/cost dynamics and productivity initiatives Industrial Segment | Industrial Segment (Millions USD, except margins) | June 29, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $588 | $601 | (2)% | | Segment operating profit | $81 | $67 | 21% | | Segment operating profit margin | 14% | 11% | 3 pp | | Segment Adjusted EBITDA | $113 | $98 | 16% | | Segment Adjusted EBITDA margin | 19% | 16% | 3 pp | - Industrial segment net sales decreased 2% to $588 million, primarily due to volume declines and the divestiture of two production facilities in China, partially offset by price increases and favorable foreign exchange rates[10] - Segment operating profit margin increased to 14% and adjusted EBITDA margin increased to 19%, driven by positive price/cost and productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives[11] All Other Businesses The 'All Other' businesses maintained flat net sales in Q2 2025, but experienced a decline in operating profit and adjusted EBITDA due to lower volumes in industrial plastics and negative price/cost All Other | All Other (Millions USD, except margins) | June 29, 2025 | June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $95 | $95 | 0% | | Operating profit | $13 | $14 | (5)% | | Operating profit margin | 14% | 15% | (1) pp | | Adjusted EBITDA | $16 | $17 | (5)% | | Adjusted EBITDA margin | 17% | 17% | 0 pp | - Net sales were flat as volume gains in temperature-assured packaging were offset by lower volume from industrial plastics[15] - Operating profit and adjusted EBITDA both declined 5% year over year due to lower volumes from industrial plastics and negative price/cost[15] Financial Position and Cash Flow This section reviews Sonoco's balance sheet and cash flow performance, highlighting significant debt reduction from divestiture proceeds and changes in operating cash flow Balance Sheet Highlights Sonoco significantly reduced its total and net debt in Q2 2025, primarily by using proceeds from the TFP divestiture to repay borrowings. The company maintained substantial available liquidity - Cash and cash equivalents were $330 million as of June 29, 2025, down from $443 million at December 31, 2024, mainly due to changes in net working capital[16] - Total debt and net debt decreased by $1.7 billion and $1.5 billion, respectively, compared to December 31, 2024, primarily from repaying a $1.5 billion term loan using TFP sale proceeds[16] - Available liquidity stood at $1,225 million on June 29, 2025, including $895 million in revolving credit facility capacity and cash on hand[16] Cash Flow Highlights Operating cash flow for the first half of 2025 was an outflow, a significant change from the prior year, mainly due to increased working capital needs for Metal Packaging EMEA, which is expected to reverse in H2 2025. Capital expenditures increased slightly, leading to negative free cash flow - Cash flow from operating activities for the six months ended June 29, 2025, was an outflow of $(15) million, compared to an inflow of $275 million in the same period of 2024[16] - The change in operating cash flow was driven by increased seasonal working capital needs for Metal Packaging EMEA, expected to reverse in the second half of the year[16] - Capital expenditures, net, for the first half of 2025 were $186 million, up from $179 million in the prior year[16] - Free Cash Flow for the first six months of 2025 was $(201) million, compared to $96 million in the same period of 2024[16] - Dividends paid increased to $104 million in H1 2025 from $101 million in H1 2024[16] Full-Year 2025 Guidance Sonoco is maintaining its full-year 2025 guidance for adjusted EBITDA and has updated its adjusted diluted EPS target to the lower end of previous guidance. The company anticipates strong performance in Consumer Packaging and continued benefits from improved market conditions and operational excellence in Industrial Paper Packaging, while remaining mindful of macroeconomic uncertainties - Maintaining full-year 2025 guidance for adjusted EBITDA of between $1.3 billion to $1.4 billion[5][20] - Updated expected adjusted diluted earnings per share to a target of approximately $6.00, or the low end of previous full-year guidance ($6.00 to $6.20)[5][20] - Target for cash flow from operating activities is approximately $800 million, or the lower end of previous guidance ($800 million to $900 million)[20] - Expects continued strong performance in Consumer Packaging, with U.S. Metal Packaging organically growing above industry rates and Metal Packaging EMEA exceeding synergy savings[17] - Industrial Paper Packaging segment is projected to have another strong quarter, benefiting from improved market conditions and margin expansion initiatives[17] Company Information & Disclosures This section provides an overview of Sonoco's global operations and its commitment to sustainability, along with important disclosures regarding forward-looking statements and associated risks About Sonoco Sonoco is a global leader in sustainable metal and fiber consumer and industrial packaging, operating in 40 countries with approximately 23,400 employees. The company focuses on innovation, collaboration, and sustainability, and was recognized as one of America's Most Trustworthy and Responsible Companies in 2025 - Sonoco is a global leader in high-value sustainable metal and fiber consumer and industrial packaging[23] - The company operates in 40 countries with approximately 23,400 employees[23] - Sonoco was named one of America's Most Trustworthy and Responsible Companies by Newsweek in 2025[23] Forward-Looking Statements This section identifies forward-looking statements regarding Sonoco's future performance, outlook, strategic initiatives, and the impact of macroeconomic factors. These statements are based on current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements include those regarding future operating and financial performance, full-year 2025 outlook, working capital expectations, ability to manage costs, and benefits from divestitures[25] - These statements are based on current expectations, estimates, and projections, and are not guarantees of future performance[26] - Risks and uncertainties include the ability to execute strategy, credit market conditions, raw material pricing, inflation, consumer demand fluctuations, and regulatory changes[28] Unaudited Financial Statements This section provides the unaudited condensed consolidated statements of income, cash flows, and balance sheets, along with detailed financial segment information for the reported periods Condensed Consolidated Statements of Income This table presents the unaudited condensed consolidated statements of income for the three and six months ended June 29, 2025, and June 30, 2024, detailing net sales, gross profit, operating profit, net income, and diluted EPS Condensed Consolidated Statements of Income | (Dollars in thousands except per share data) | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,910,441 | $1,278,801 | $3,619,669 | $2,587,437 | | Gross profit | $406,277 | $285,243 | $759,964 | $556,408 | | Operating profit | $175,667 | $95,811 | $302,527 | $168,383 | | Net income attributable to Sonoco | $493,423 | $90,811 | $547,852 | $155,988 | | Diluted earnings attributable to Sonoco per common share | $4.96 | $0.92 | $5.51 | $1.57 | Condensed Statements of Income for Discontinued Operations This table provides the unaudited condensed statements of income specifically for discontinued operations for the three and six months ended June 29, 2025, and June 30, 2024, including net sales, operating profit, and net income from these operations Condensed Statements of Income for Discontinued Operations | (Dollars in thousands except per share data) | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $— | $344,678 | $320,678 | $673,585 | | Operating profit | $625,773 | $44,561 | $663,564 | $84,442 | | Net income from discontinued operations | $424,548 | $33,540 | $429,720 | $63,301 | | Diluted earnings from discontinued operations per common share | $4.27 | $0.34 | $4.32 | $0.64 | Financial Segment Information This table details the unaudited net sales and operating profit for Sonoco's reportable segments (Consumer Packaging, Industrial Paper Packaging) and All Other businesses for the three and six months ended June 29, 2025, and June 30, 2024 Financial Segment Information | (Dollars in thousands) | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales: | | | | | | Consumer Packaging | $1,227,033 | $583,051 | $2,293,626 | $1,164,721 | | Industrial Paper Packaging | $588,239 | $600,770 | $1,145,948 | $1,193,830 | | All Other | $95,169 | $94,980 | $180,095 | $228,886 | | Operating profit: | | | | | | Consumer Packaging | $160,353 | $73,756 | $301,124 | $132,323 | | Industrial Paper Packaging | $81,231 | $66,958 | $152,355 | $132,802 | | All Other | $13,109 | $13,865 | $25,035 | $30,990 | Condensed Consolidated Statements of Cash Flows This table presents the unaudited condensed consolidated statements of cash flows for the six months ended June 29, 2025, and June 30, 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | (Dollars in thousands) | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $547,688 | $156,224 | | Net cash (used)/provided by operating activities | $(14,653) | $275,489 | | Purchases of property, plant and equipment, net | $(186,393) | $(179,361) | | Proceeds from the sale of business, net | $1,814,930 | $81,517 | | Net debt repayments | $(1,668,876) | $(71,244) | | Cash dividends | $(103,558) | $(101,310) | | Net decrease in cash and cash equivalents | $(113,260) | $(11,704) | | Cash and cash equivalents at end of period | $329,800 | $140,233 | Condensed Consolidated Balance Sheets This table provides the unaudited condensed consolidated balance sheets as of June 29, 2025, and December 31, 2024, outlining assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets | (Dollars in thousands) | June 29, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets: | | | | Total Current Assets | $3,036,618 | $3,178,560 | | Property, plant and equipment, net | $2,883,135 | $2,718,747 | | Goodwill | $2,678,045 | $2,525,657 | | Total Assets | $11,970,424 | $12,507,790 | | Liabilities and Shareholders' Equity: | | | | Total Current Liabilities | $2,423,174 | $4,038,291 | | Long-term debt, net of current portion | $4,986,643 | $4,985,496 | | Total equity | $3,250,833 | $2,286,213 | | Total Liabilities and Shareholders' Equity | $11,970,424 | $12,507,790 | Non-GAAP Financial Measures & Reconciliations This section defines Sonoco's non-GAAP financial measures and provides detailed reconciliations to their most directly comparable GAAP measures for both quarterly and year-to-date periods Definition of Non-GAAP Measures Sonoco uses non-GAAP financial measures like 'adjusted operating profit,' 'adjusted net income,' 'adjusted diluted EPS,' 'Adjusted EBITDA,' 'Adjusted EBITDA Margin,' 'Net Debt,' and 'Net Leverage' to provide a clearer view of its underlying financial performance by excluding specific items such as restructuring charges, acquisition-related costs, and gains/losses from divestitures. These measures are used for internal planning, performance evaluation, and investor guidance - Non-GAAP measures adjust GAAP results to exclude items like restructuring charges, acquisition/divestiture costs, gains/losses from asset sales, non-operating pension costs, and amortization of acquisition intangibles[44][49] - Adjusted EBITDA is defined as net income excluding interest, taxes, depreciation, amortization, non-operating pension costs, and other specific adjustments[46] - Free Cash Flow is defined as cash flow from operations minus net capital expenditures[54] - These non-GAAP measures are used for internal planning, evaluating ongoing operations, assessing management performance, and providing earnings guidance[51] Quarterly Reconciliations This section provides detailed reconciliations of Sonoco's GAAP financial measures to their corresponding non-GAAP adjusted measures for the three-month periods ended June 29, 2025, and June 30, 2024, covering adjusted operating profit, net income, EPS, and Adjusted EBITDA by segment Adjusted Operating Profit, Net Income, EPS (Q2 2025) | Dollars in thousands, except per share data | Operating Profit | Income Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | As Reported (GAAP) | $175,667 | $105,881 | $39,500 | $493,423 | $4.96 | | Total adjustments | $71,271 | $74,253 | $6,631 | $(357,308) | $(3.59) | | Adjusted | $246,938 | $180,134 | $46,131 | $136,115 | $1.37 | Adjusted Operating Profit, Net Income, EPS (Q2 2024) | Dollars in thousands, except per share data | Operating Profit | Income Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | As Reported (GAAP) | $95,811 | $71,893 | $16,756 | $90,811 | $0.92 | | Total adjustments | $46,134 | $44,858 | $13,856 | $35,946 | $0.36 | | Adjusted | $141,945 | $116,751 | $30,612 | $126,757 | $1.28 | Adjusted EBITDA (Q2) | Dollars in thousands | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net income attributable to Sonoco | $493,423 | $90,811 | | Total Adjustments | $(165,492) | $171,403 | | Adjusted EBITDA | $327,931 | $262,214 | Segment Adjusted EBITDA (Q2 2025) | Dollars in thousands | Consumer | Industrial | All Other | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Segment and Total Operating Profit | $160,353 | $81,231 | $13,109 | $(79,026) | $175,667 | | Total Adjustments | $52,971 | $31,938 | $2,643 | $64,712 | $152,264 | | Segment Adjusted EBITDA | $213,324 | $113,169 | $15,752 | $(14,314) | $327,931 | | Segment Adjusted EBITDA Margin | 17.4% | 19.2% | 16.6% | | | Segment Adjusted EBITDA (Q2 2024) | Dollars in thousands | Consumer | Industrial | All Other | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Segment and Total Operating Profit | $73,756 | $66,958 | $13,865 | $(58,768) | $95,811 | | Total Adjustments | $25,267 | $30,880 | $2,717 | $46,134 | $104,998 | | Segment Adjusted EBITDA | $99,023 | $97,838 | $16,582 | $(12,634) | $200,809 | | Segment Adjusted EBITDA Margin | 17.0% | 16.3% | 17.5% | | | Year-to-Date Reconciliations This section provides detailed reconciliations of Sonoco's GAAP financial measures to their corresponding non-GAAP adjusted measures for the six-month periods ended June 29, 2025, and June 30, 2024, covering adjusted operating profit, net income, EPS, and Adjusted EBITDA by segment Adjusted Operating Profit, Net Income, EPS (YTD 2025) | Dollars in thousands, except per share data | Operating Profit | Income Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | As Reported (GAAP) | $302,527 | $174,424 | $60,647 | $547,852 | $5.51 | | Total adjustments | $157,134 | $163,237 | $26,037 | $(274,897) | $(2.77) | | Adjusted | $459,661 | $337,661 | $86,684 | $272,955 | $2.74 | Adjusted Operating Profit, Net Income, EPS (YTD 2024) | Dollars in thousands, except per share data | Operating Profit | Income Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | | :--- | :--- | :--- | :--- | :--- | :--- | | As Reported (GAAP) | $168,383 | $114,139 | $24,627 | $155,988 | $1.57 | | Total adjustments | $104,010 | $106,030 | $33,124 | $82,262 | $0.83 | | Adjusted | $272,393 | $220,169 | $57,751 | $238,250 | $2.40 | Adjusted EBITDA (YTD) | Dollars in thousands | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net income attributable to Sonoco | $547,852 | $155,988 | | Total Adjustments | $117,835 | $350,979 | | Adjusted EBITDA | $665,687 | $506,967 | Segment Adjusted EBITDA (YTD 2025) | Dollars in thousands | Consumer | Industrial | All Other | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Segment and Total Operating Profit | $301,124 | $152,355 | $25,035 | $(175,987) | $302,527 | | Total Adjustments | $101,875 | $62,243 | $5,197 | $144,058 | $313,373 | | Segment Adjusted EBITDA | $402,999 | $214,598 | $30,232 | $(31,929) | $615,900 | | Segment Adjusted EBITDA Margin | 17.6% | 18.7% | 16.8% | | | Segment Adjusted EBITDA (YTD 2024) | Dollars in thousands | Consumer | Industrial | All Other | Corporate | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Segment and Total Operating Profit | $132,323 | $132,802 | $30,990 | $(127,732) | $168,383 | | Total Adjustments | $50,176 | $60,508 | $6,369 | $103,990 | $221,043 | | Segment Adjusted EBITDA | $182,499 | $193,310 | $37,359 | $(23,722) | $389,446 | | Segment Adjusted EBITDA Margin | 15.7% | 16.2% | 16.3% | | | Free Cash Flow Reconciliation This table reconciles net cash (used)/provided by operating activities to Free Cash Flow for the six months ended June 29, 2025, and June 30, 2024 FREE CASH FLOW | FREE CASH FLOW (Dollars in thousands) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash (used)/provided by operating activities | $(14,653) | $275,489 | | Purchase of property, plant and equipment, net | $(186,393) | $(179,361) | | Free Cash Flow | $(201,046) | $96,128 | Investor Information This section provides details for investors regarding the upcoming conference call to discuss Q2 2025 results and contact information for investor relations inquiries Conference Call Webcast Details Sonoco will host a conference call on Thursday, July 24, 2025, at 8:00 a.m. Eastern Time to discuss the second quarter 2025 results. A live audio webcast and supporting materials will be available on the Sonoco Investor Relations website, with a replay available for at least 30 days - Conference call to discuss Q2 2025 results will be held on Thursday, July 24, 2025, at 8:00 a.m. Eastern Time[19][20] - A live audio webcast and supporting materials will be available on the Sonoco Investor Relations website (https://investor.sonoco.com/)[19](index=19&type=chunk) - A webcast replay will be available on the company's website for at least 30 days[19] - Telephone participants need to register in advance to receive a dial-in number and unique PIN[21] Contact Information Contact information for investor relations is provided for inquiries regarding the company's financial results - Contact: Roger Schrum, Interim Head of Investor Relations and Communications[22] - Email: roger.schrum@sonoco.com, Phone: 843-339-6018[22]