Sonoco Earnings Miss Estimates in Q4, Sales Increase 2% Y/Y

Core Viewpoint - Sonoco Products Company reported mixed financial results for the fourth quarter of 2024, with adjusted EPS slightly missing estimates and net sales falling short of expectations, while the company continues to navigate challenges from acquisitions and divestitures [1][3][13]. Financial Performance - Adjusted EPS for Q4 2024 was $1.17, missing the Zacks Consensus Estimate of$ 1.18, but within the company's guided range of $1.15 to$ 1.35. Including the impact of the Eviosys acquisition, adjusted EPS was $1.00, down 2% from$ 1.02 in the previous year [1][2]. - Net sales for Q4 were $1.36 billion, missing the Zacks Consensus Estimate of$ 1.75 billion, but reflecting a 2% year-over-year increase from the adjusted figure of $1.34 billion in the prior year [3][4]. - The cost of sales increased by 3% year-over-year to$ 1.08 billion, leading to a gross profit of $283 million, which is a 1.7% decline from the previous year. The gross margin decreased to 20.8% from 21.6% [5]. - Adjusted operating income fell by 5% to$ 127 million, with an operating margin of 9.3%, down from 10.1% in the prior year [5]. Segment Performance - The Consumer Packaging segment saw net sales rise by 18% year-over-year to $705 million, driven by Eviosys sales and volume growth, with adjusted EBITDA of$ 100 million, up 9% [7]. - The Industrial Paper Packaging segment reported net sales of $571 million, a 4% decline year-over-year, but adjusted segment EBITDA grew by 11.9% to$ 102 million [8]. - The All Other segment experienced a significant 40% drop in sales to $88 million, with adjusted EBITDA falling to$ 8 million from $23 million in the previous year [9]. Cash Flow and Balance Sheet - At the end of 2024, Sonoco had cash and cash equivalents of$ 431 million, up from $139 million at the end of 2023, and generated operating cash flow of approximately$ 834 million [10][11]. - Total debt increased to around $7 billion from$ 3 billion as of December 31, 2023 [11]. Strategic Moves - Sonoco has agreed to sell its Thermoformed and Flexibles Packaging business and global Trident business to TOPPAN Holdings, Inc. for approximately $1.8 billion, aiming to use proceeds to reduce debt levels [12]. 2024 Performance and Guidance - For the full year 2024, adjusted EPS declined by 7% to$ 4.89, missing the consensus estimate of $5.08, while revenues decreased by 2.5% to$ 5.3 billion [13]. - The company projects adjusted EPS for 2025 to be between $6.00 and$ 6.20, with adjusted EBITDA expected between $1.3 billion and$ 1.4 billion [14]. Stock Performance - Sonoco's shares have decreased by 15.6% over the past year, contrasting with the industry's growth of 9.6% [15].