Sonoco Products Company · NYSE:SON
Sonoco Products — Q1 2024 Earnings Presentation
27 slides from Sonoco Products's earnings presentation, May 1, 2024
Slide 1: 1st Quarter 2024 Earnings Results
1ST QUARTER 2024 EARNINGS RESULTS May 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: Q1 2024 Results Summary
Q1 2024 Results Summary DELIVERED SOLID RESULTS FROM PRODUCTIVITY Revenue Adj. EBITDA Adj. Net Income* Adj. Earnings Per Share* $1.64B $245M $111M $1.12 15% Margin 7% Margin Q1 Highlights First quarter results above the midpoint of guidance • EBITDA margins remain strong at ~15% • Generated $166 mil
Slide 6: 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 7: 2024-2025 Strategic Priorities
2024-2025 STRATEGIC PRIORITIES PORTFOLIO ALIGNMENT Consumer Industrial RIGID PAPER Building New Strategic Platform CONTAINERS INDUSTRIAL Thermoformed and Flexibles PACKAGING Packaging (TFP) THERMOFORMED Resolving the All Other group of AND FLEXIBLES PACKAGING (TFP) ~ $6.8B businesses 2023 Sales Orga
Slide 8: 2024-2025 Strategic Priorities: Progress Updates
2024-2025 STRATEGIC PRIORITIES PROGRESS UPDATES Completed Divestiture Integration Progress Sonoco Design Awards Sonoco Signs VPPA Thermoformed Flexible Packaging Packaging • Planned portfolio simplification • New Platform created Jan. 1, 2024 • Winners at the 2024 PAC Awards • 15-Year Virtual Power
Slide 9: Sonoco Releases 2023 Corporate Sustainability Report
SONOCO RELEASES 2023 CORPORATE SUSTAINABILITY REPORT Covers the company’s progress during the past year and sets sustainability goals for 2025 & 2030 Protecting our Investing in our Striving for transparency environment people & communities at the executive level Highlights 1.5% YoY decrease in Ener
Slide 10: Financial Results & Outlook
FINANCIAL RESULTS & OUTLOOK Rob Dillard Chief Financial Officer
Slide 11: Q1 Financial Results vs 2023
Q1 - 24 Financial Results vs 2023 RESILIENT OPERATING PERFORMANCE Q1-23 Q1-24 YoY % Change Lower prices across the portfolio resulted in sales Net Sales ($M) $1,730 $1,638 -5.3% declines Adjusted Operating Profit ($M) $213 $176 -17.5% Unfavorable price/cost from Industrial input inflation and Adjust
Slide 12: Consumer Segment: Q1-24 Results
Consumer Segment: Q1-24 Results VOLUME PRESSURES PRIMARILY IN NA Q1 Results Sales ($M) Adj. EBITDA ($M) • Inflationary pricing continued to -5% Flat negatively impact volume – primarily in snacks and $958 $911 confectionary in North America $129 $129 • RPC and TFP grew volumes outside of North Ameri
Slide 13: Industrial Segment: Q1-24 Results
Industrial Segment: Q1-24 Results VOLUMES STABILIZING Q1 Results Sales ($M) Adj. EBITDA ($M) • Volumes stabilizing; improving -4% paper demand in North America $616 -21% and Europe $593 $121 • Transitioning recycling to a $95 procurement function reduced 20% sales 16% • Paper price increases impleme
Slide 14: All Other Group of Businesses: Q1-24 Results
All Other Group of Businesses: Q1-24 Results THREE BUSINESSES REMAIN Q1 Results Sales ($M) Adj. EBITDA ($M) • Sales declined due to development cycle delays in -14% -20% temperature assured packaging $156 $134 $26 $21 • Sale of Protective Solutions completed on April 1, 2024, 17% proceeds used to re
Slide 15: Balanced Approach to Capital Allocation
BALANCED APPROACH TO CAPITAL ALLOCATION Disciplined Investment in Our Strategy Capital Investment Dividend Invest in the businesses Reward shareholders Dynamic capital allocation Track record of consistent Focus on increasing ROIC dividend growth Industry leading yield Share Repurchases M&A Addition
Slide 16: Cash Flow Overview
Cash Flow Overview STRONG CASH FLOW GENERATION Operating Cash Flow ($M) Q1 Results $251 $268 $267 • Generated $166M of Operating Cash Flow in Q1, a 70% increase $166 versus Q1 2023 $98 • Tight working capital controls expected to drive Operating Cash Flow opportunity Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 in
Slide 17: 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 Q1 2024 2025 Potential for <2.0x in 2025 Ball Metal RTS and excluding acquisitions Packaging Chattanooga Mill and divestitur
Slide 18: 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 18 Quarterly Dividend of $0.52 per Years of Consecutive Consecutive share as
Slide 19: 2024 Financial Outlook
2024 FINANCIAL OUTLOOK Updated for the Protective Solutions divestiture Summary $ in Millions (except EPS) 2024 Guidance EBITDA and EPS ranges revised for Adjusted EBITDA $1,050 - $1,090 sale of Protective Solutions and continue to represent anticipated modest volume recovery, Adjusted EPS $5.00 - $
Slide 20: Q2-24 Segment Outlook
Q2-24 SEGMENT OUTLOOK CONSUMER INDUSTRIAL ALL OTHER PACKAGING PRODUCTS BUSINESSES • Anticipate sales up sequentially from • Anticipate organic volumes up low • Anticipate lower than expected seasonally higher volumes in metal single digits sequentially and year-over- sales due to lower volumes in pa
Slide 21: Next Stage of Value Creation
NEXT STAGE OF VALUE CREATION Future Foundation Margin improvement plans Differentiated operating model Business specific growth strategies Strong business positions Dynamic capital allocation Strong balance sheet Active portfolio management History of growing dividends 21
Slide 22: Q1 2024 Earnings & Q&A
& Q1 2024 EARNINGS May 1, 2024 Sonoco Investor Day 2024 | 22
Slide 23: Appendix
APPENDIX Quarter-ending: March 31, 2024
Slide 24: EPS Summary
EPS SUMMARY 2024 Vs. 2023 First Quarter 2024 2023 GAAP EPS $ 0.66 $ 1.50 Addback for: Acquisition and divestiture related costs, net 0.04 0.04 LIFO Reserve change — (0.04) Acquisition intangibles amortization expense 0.18 0.16 Restructuring, net 0.25 0.22 Gain on disposition and other — (0.55) Non-o
Slide 25: P&L Summary (Adjusted)
P&L SUMMARY (ADJUSTED) First Quarter: 2024 Vs. 2023 (Dollars in millions) Better / (Worse) 2024 2023 $ % Net sales $ 1,638 $ 1,730 $ (92) (5.3) % Gross profit 338 369 (31) (8.3) % SG&A Expenses, net of Other Income (162) (156) (5) (3.5) % Operating Profit $ 176 $ 213 $ (37) (17.5) % Net interest (28
Slide 26: Balance Sheet
BALANCE SHEET (Dollars in millions) 3/31/2024 12/31/2023 Change $ Cash and cash equivalents $ 172 $ 152 $ 20 Trade accounts receivable, net of allowances 940 905 35 Other receivables 102 107 (5) Inventories 749 774 (25) Prepaid expenses 101 113 (12) Current Assets $ 2,064 $ 2,051 $ 13 Property, plan
Slide 27: Sales and Adj. Operating Profit Bridge
Sales and Adj. Operating Profit Bridge Year over Year (Dollars in millions) Sales Consumer Industrial All Other Total Q1 2023 $ 958 $ 616 $ 156 $ 1,730 Volume / Mix* (25) 49 (23) 2 Price (20) (37) — (57) FX / Other (2) (35) — (37) Q1 2024 $ 911 $ 593 $ 134 $ 1,638 Adj Operating Profit Q1 2023 $ 96 $
Sonoco Products Company — Q1 2024 Earnings Presentation on 6ix