Sonoco Products Company · NYSE:SON
Sonoco Products — Q2 2024 Earnings Presentation
27 slides from Sonoco Products's earnings presentation, Aug 1, 2024
Slide 1: 2nd Quarter 2024 Earnings Results
2ND QUARTER 2024 EARNINGS RESULTS August 1, 2024
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS / NON-GAAP FINANCIAL MEASURES Statements 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 amen
Slide 3: Today's Attendees
TODAY’S ATTENDEES Lisa Weeks Howard Coker Rob Dillard Rodger Fuller VP of IR & Communications President & CEO Chief Financial Officer Chief Operating Officer 3
Slide 4: Business Update
BUSINESS UPDATE Howard Coker President & CEO
Slide 5: Q2 2024 Results Summary
Q2 2024 Results Summary DELIVERED SOLID RESULTS FROM PRODUCTIVITY Revenue Adj. EBITDA Adj. Net Income* Adj. Earnings Per Share* $1.62B $262M $127M $1.28 16% Margin 8% Margin Q2 Highlights Results in line with guidance: • EBITDA margins remain strong at ~16% • Generated $109 million of operating cash
Slide 6: Strategic Priorities Updates
STRATEGIC PRIORITIES UPDATES Operating with Sustainability Strategic Discipline Design Awards M&A • Payoff from increased capital spending • Mono-materials Pringles tube design • Announced transaction on 6/24/2024 • Comprehensive cost optimization • Gold Award: Snacks & Confectionary • Approvals & i
Slide 7: Sonoco to Acquire Eviosys
SONOCO TO ACQUIRE EVIOSYS Eviosys At-a-Glance #1 in food cans in Europe Acquisition Highlights ~$2.5B Adds scale to our core metal can platform; proforma, Sonoco will be the 2024E Revenue leading metal food and aerosol can manufacturer globally ~$430M Expands customer relationships across product of
Slide 8: Financial Results & Outlook
FINANCIAL RESULTS & OUTLOOK Rob Dillard Chief Financial Officer
Slide 9: Q2 Financial Results vs 2023
Q2 - 24 Financial Results vs 2023 RESILIENT OPERATING PERFORMANCE Q2-23 Q2-24 YoY % Change Net Sales driven by positive low-single-digit volume/mix Net Sales ($M) $1,705 $1,623 -4.8% offset by strategic activity of divestitures, market exits, and Adjusted Operating Profit ($M) $211 $193 -8.5% reclas
Slide 10: Consumer Segment: Q2-24 Results
Consumer Segment: Q2-24 Results CONTINUED PROFITABILITY GROWTH Q2 Results Sales ($M) Adj. EBITDA ($M) • Consumer volume/mix increased low-single-digits due to -4% 11% acquisitions and positive organic $971 $148 volume/mix in Flexibles and SMP $928 $134 • Over 50% sequential 14% 16% improvement in pr
Slide 11: Industrial Segment: Q2-24 Results
Industrial Segment: Q2-24 Results VOLUMES STABILIZING Q2 Results Sales ($M) Adj. EBITDA ($M) • Industrial volume/mix increased 3% 10% due to acquisitions and $601 -15% improving paper demand globally $585 $115 $98 • Strong productivity of $23M due to improved operating leverage 20% 16% and lower fix
Slide 12: All Other Group of Businesses: Q2-24 Results
All Other Group of Businesses: Q2-24 Results THREE BUSINESSES REMAIN Q2 Results Sales ($M) Adj. EBITDA ($M) • Lower volumes and price/cost headwinds partially offset by -36% -37% productivity $149 $26 $95 • Sale of Protective Solutions $17 completed on April 1, 2024, 18% proceeds used to reduce debt
Slide 13: Balanced Approach to Capital Allocation
BALANCED APPROACH TO CAPITAL ALLOCATION Disciplined Investment in Our Strategy Capital Investment Dividend Invest to drive productivity and Reward shareholders growth Track record of consistent Dynamic capital allocation dividend growth Focus on increasing ROIC* Industry leading yield Share Repurcha
Slide 14: Cash Flow Overview
Cash Flow Overview STRONG CASH FLOW GENERATION Operating Cash Flow ($M) Q2 Results $251 $268 $267 • Generated $109M of Operating Cash Flow in Q2 $166 $98 $109 • Improving EBITDA and inventory management expected to drive stronger second half Operating Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Q2F24 Cash Flow Gr
Slide 15: Focus on Investment Grade Capital Structure
FOCUS ON INVESTMENT GRADE CAPITAL STRUCTURE Prioritizing Debt Reduction 4.00 Net Debt / EBITDA 3.50 3.00 3.0x 2.50 2.00 2.0x 1.50 1.00 0.50 0.00 2021 Q1 2022 2022 Q3 2023 2023 Q2 2024 Ball Metal RTS and Packaging Chattanooga Mill >$1.4B Total Liquidity Strong and flexible balance sheet to support ba
Slide 16: Q3 and 2024 Financial Outlook
Q3 AND 2024 FINANCIAL OUTLOOK Summary $ in Millions (except EPS) 2024 Guidance Reaffirming full year EBITDA, EPS, and Operating Cash Flow Guidance (excludes Eviosys and any Adjusted EBITDA $1,050 - $1,090 divestiture impacts) Q3 Adjusted EPS Range reflects sequential and year-over-year Adjusted EPS
Slide 17: Q3-24 Segment Outlook
Q3-24 SEGMENT OUTLOOK CONSUMER INDUSTRIAL ALL OTHER PACKAGING PRODUCTS BUSINESSES • Anticipate sales up sequentially and • Anticipate sales flat sequentially and up • Anticipate lower sales year-over- year-over-year from seasonally higher year-over-year from improving volumes year from the sell of P
Slide 18: Positioned to Deliver Long-Term Shareholder Value
POSITIONED TO DELIVER LONG-TERM SHAREHOLDER VALUE 2028 SONOCO TARGETS Portfolio Adjusted EBITDA Cash Flow Capital Strategy 25% $1.5B $4-$5B • Investment Grade Balance Sheet Industrial 75% Margins in cumulative operating cash flow (2024-28) • Dynamic Capital Allocation Consumer High Teens Deliver on
Slide 19: Q2 2024 Earnings
& Q2 2024 EARNINGS August 1, 2024
Slide 20: Appendix
APPENDIX Quarter-ending: June 30th, 2024
Slide 21: EPS Summary
EPS SUMMARY 2024 Vs. 2023 Second Quarter Year To Date 2024 2023 2024 2023 GAAP EPS $ 0.92 $ 1.16 $ 1.57 $ 2.66 Addback for: Acquisition and divestiture related costs, net 0.17 0.03 0.21 0.08 LIFO Reserve change (0.01) (0.01) (0.01) (0.05) Acquisition intangibles amortization expense 0.17 0.16 0.35 0
Slide 22: P&L Summary (Adjusted) - Second Quarter
P&L SUMMARY (ADJUSTED) Second Quarter: 2024 Vs. 2023 (Dollars in millions) Better / (Worse) 2024 2023 $ % Net sales $ 1,623 $ 1,705 $ (82) (4.8)% Gross profit 356 356 — 0.1 % SG&A Expenses, net of Other Income (163) (145) (17) (12.0)% Operating profit $ 193 $ 211 $ (18) (8.5)% Net interest (26) (32)
Slide 23: P&L Summary (Adjusted) - Year to Date
P&L SUMMARY (ADJUSTED) Year to Date: 2024 Vs. 2023 (Dollars in millions) Better / (Worse) 2024 2023 $ % Net sales $ 3,261 $ 3,435 $ (174) (5.1)% Gross profit 694 725 (31) (4.3)% SG&A Expenses, net of Other Income (325) (300) (25) (8.4)% Operating Profit $ 369 $ 425 $ (56) (13.1)% Net interest (53) (
Slide 24: Balance Sheet
BALANCE SHEET (Dollars in millions) 6/30/2024 12/31/2023 Change $ Cash and cash equivalents $ 140 $ 152 $ (12) Trade accounts receivable, net of allowances 960 905 55 Other receivables 110 107 3 Inventories 733 774 (41) Prepaid expenses 172 113 59 Current Assets $ 2,115 $ 2,051 $ 64 Property, plant
Slide 25: Sales and Adj. Operating Profit Bridge - Quarter
SALES AND ADJ. OPERATING PROFIT BRIDGE Quarter over Quarter: 2024 Vs. 2023 (Dollars in millions) Sales Consumer Industrial All Other Total Q2 2023 Sales $ 971 $ 585 $ 149 $ 1,705 Volume / Mix* 15 61 (53) 23 Price (19) (12) (1) (32) FX / Other (39) (33) — (73) Q2 2024 Sales $ 928 $ 601 $ 95 $ 1,623 A
Slide 26: Sales and Adj. Operating Profit Bridge - Year to Date
SALES AND ADJ. OPERATING PROFIT BRIDGE Year to Date: 2024 Vs. 2023 (Dollars in millions) Sales Consumer Industrial All Other Total 2023 Sales $ 1,929 $ 1,201 $ 305 $ 3,435 Volume / Mix* (9) 110 (76) 25 Price (40) (49) — (89) FX / Other (42) (68) — (110) 2024 Sales $ 1,838 $ 1,194 $ 229 $ 3,261 Adj O
Slide 27: Dividend Is Foundational
DIVIDEND IS FOUNDATIONAL $2.02 Raised Dividend for the 41st Consecutive Year $1.92 $1.80 $1.70 $1.72 $1.62 $1.54 $1.46 Dividend in $s $1.37 $1.27 $1.23 $1.19 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 41 99 27 Quarterly Dividend of $0.52 per Years of Consecutive Consecutive share as
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