HARTSVILLE, S.C., April 30, 2024 (GLOBE NEWSWIRE) -- Sonoco Products Company ("Sonoco" or the "Company") (NYSE:SON), one of the largest sustainable global packaging companies, today 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 41st 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       (Dollars in millions except per share data)                         Three Months Ended             GAAP Results March 31, 2024 April 2, 2023   Change                           Net sales1 $ 1,638 $ 1,730   (5 )%       Operating profit $ 112 $ 230   (51 )%       Net income attributable to Sonoco $ 65 $ 148   (56 )%       EPS (diluted) $ 0.66 $ 1.50   (56 )%                         1Net sales for the three months ended April 2, 2023 include $33 million from recycling operations. Effective January 1, 2024, recycling operations are conducted as a procurement function, hence, recycling sales margins are only reflected in cost of sales.                             Three Months Ended             Non-GAAP Results2 March 31, 2024 April 2, 2023   Change                           Adjusted operating profit $ 176 $ 213   (18 )%       Adjusted EBITDA $ 245 $ 276   (11 )%       Adjusted net income attributable to Sonoco ("Adjusted Earnings") $ 111 $ 138   (19 )%       Adjusted EPS (diluted) $ 1.12 $ 1.40   (20 )%                       2 See the Company's definitions of non-GAAP financial measures, explanations as to why they are used, and reconciliations to the most directly comparable U.S. generally accepted accounting principles ("GAAP") financial measures later in this release. 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.     Three Months Ended       Consumer Packaging March 31, 2024   April 2, 2023 Change                     Net sales $ 911     $ 958   (5 )%     Segment operating profit $ 93     $ 96   (4 )%     Segment operating profit margin   10 %     10 %         Segment Adjusted EBITDA1 $ 129     $ 129   — %     Segment Adjusted EBITDA margin1   14 %     13 %                               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     Three Months Ended         Industrial Paper Packaging March 31, 2024   April 2, 2023 Change                       Net sales2 $ 593     $ 616   (4 )%     Segment operating profit $ 66     $ 94   (30 )%     Segment operating profit margin   11 %     15 %         Segment Adjusted EBITDA1 $ 95     $ 121   (21 )%     Segment Adjusted EBITDA margin1   16 %     20 %                               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%     Three Months Ended         All Other March 31, 2024   April 2, 2023 Change                       Net sales $ 134     $ 156   (14 )%     Operating profit $ 17     $ 23   (24 )%     Operating profit margin   13 %     15 %         Adjusted EBITDA1 $ 21     $ 26   (20 )%     Adjusted EBITDA margin1   16 %     17 %                               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 1Segment and All Other Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See the Company's reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures later in this release.2Net sales for the three months ended April 2, 2023 include $33 million from recycling operations. 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." (1)Although the Company believes the assumptions reflected in the range of guidance are reasonable, given the uncertainty regarding the future performance of the overall economy, the effects of inflation, the continued challenges in global supply chains, potential changes in raw material prices, other costs, and the Company's effective tax rate, as well as other risks and uncertainties, including those described below, actual results could vary substantially. Further information can be found in the section entitled "Forward-looking Statements" in this release. (2) Second quarter and full year 2024 GAAP guidance are not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast without unreasonable efforts: restructuring costs and restructuring-related impairment charges, acquisition/divestiture-related costs, gains or losses on the sale of businesses or other assets, and the income tax effects of these items and/or other income tax-related events. These items could have a significant impact on the Company's future GAAP financial results. Accordingly, a quantitative reconciliation of Adjusted EPS guidance has been omitted in reliance on the exception provided by Item 10 of Regulation S-K.         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. Conference Call WebcastManagement will host a conference call and webcast to further discuss these results beginning at 8:30 am EDT, Wednesday, May 1, 2024. The live conference call and a corresponding presentation can be accessed via the Company's Investor Relations website at https://investor.sonoco.com. To listen via telephone, please register in advance at https://edge.media-server.com/mmc/p/95xz4bah/. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the conference call and webcast will be archived on the Company's Investor Relations website for at least 30 days. Contact Information: Lisa WeeksVice President of Investor Relations & About SonocoWith net sales of approximately $6.8 billion in 2023, Sonoco 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. Sonoco was named one of America's Most Responsible Companies by Newsweek. For more information on the Company, visit our website at www.sonoco.com. Forward-looking StatementsStatements included herein that are not historical in nature, 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. In addition, the Company and its representatives may from time to time make other oral or written statements that are also "forward-looking statements." Words such as "assume," "believe," "committed," "continue," "could," "estimate," "expect," "focused," "future," "guidance," "likely," "may," "ongoing," "outlook," "potential," "seek," "strategy," "will," or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this communication include statements regarding, but not limited to: the Company's future operating and financial performance, including second quarter and full year 2024 outlook and the anticipated drivers thereof; the Company's ability to support its customers and manage costs; opportunities for productivity and other operational improvements; price/cost, customer demand and volume outlook; expected benefits from and integration efforts related to acquisitions and divestitures; the Company's expectations with respect to the VPPA and its contribution to the Company's emissions reduction goals; the effectiveness of the Company's strategy and strategic initiatives, including with respect to capital expenditures, portfolio simplification and capital allocation priorities; the Company's pipeline of organic and inorganic investment opportunities; the effects of the macroeconomic environment and inflation on the Company and its customers; and the Company's ability to generate continued value and return capital to shareholders. Such forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning our future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. Such risks, uncertainties and assumptions include, without limitation, those related to: the Company's ability to execute on its strategy, including with respect to acquisitions (and integrations thereof), divestitures, cost management, productivity improvements, restructuring and capital expenditures, and achieve the benefits it expects therefrom; the operation of new manufacturing capabilities; the Company's ability to achieve anticipated cost and energy savings; the 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 conflict in Israel and Gaza), 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; the costs of labor; the effects of inflation, fluctuations in consumer demand, volume softness, and other macroeconomic factors on the Company and the industries in which it operates and that it serves; the Company's ability to meet its environmental and sustainability goals, including with respect to greenhouse gas emissions; and to meet other social and governance goals, including challenges in implementation thereof; and the other risks, uncertainties and assumptions discussed in the Company's filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q, particularly under the heading "Risk Factors." The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur. References to our Website Address References to our website address and domain names throughout this release are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission's rules or the New York Stock Exchange Listing Standards. These references are not intended to, and do not, incorporate the contents of our website by reference into this release.   CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars and shares in thousands except per share data)                   Three Months Ended        March 31, 2024    April 2, 2023   Net sales $ 1,637,543     $ 1,729,783 Cost of sales   1,299,990       1,355,355 Gross profit   337,553       374,428 Selling, general, and administrative expenses   193,482       187,976 Restructuring/Asset impairment charges   31,618       28,814 Gain on divestiture of business and other assets   —       72,010 Operating profit   112,453       229,648 Non-operating pension costs   3,295       3,658 Net interest expense   27,662       32,670 Income before income taxes   81,496       193,320 Provision for income taxes   17,360       46,912 Income before equity in earnings of affiliates   64,136       146,408 Equity in earnings of affiliates, net of tax   1,137       1,856 Net income   65,273       148,264 Net (income)/loss attributable to noncontrolling interests   (96 )     55 Net income attributable to Sonoco $ 65,177     $ 148,319             Weighted average common shares outstanding – diluted   99,159       98,615             Diluted earnings per common share $ 0.66     $ 1.50 Dividends per common share $ 0.51     $ 0.49   FINANCIAL SEGMENT INFORMATION (Unaudited) (Dollars in thousands)                 Three Months Ended         March 31, 2024   April 2, 2023 Net sales:           Consumer Packaging   $ 910,577     $ 958,008     Industrial Paper Packaging     593,060       615,855     Total reportable segments     1,503,637       1,573,863     All Other     133,906