Sonoco Products Company · NYSE:SON
Sonoco Products — Investor Day (February 2024)
126 slides from Sonoco Products's investor day presentation, Feb 22, 2024
Slide 1: 2024 Investor Day
2024 INVESTOR DAY Feb 22, 2024
Slide 2: Welcome
WELCOME Lisa Weeks VP, Investor Relations and Communications
Slide 3: 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 ame
Slide 4: Today's Agenda
Welcome Lisa Weeks VP of Investor Relations and Communications Advancing Sonoco’s Strategy Howard Coker President and CEO Elevating Sonoco’s Operating Model Rodger Fuller Chief Operating Officer Consumer Segment TODAY’S Rigid Paper & Closures Sean Cairns President, Rigid Paper and Closures AGENDA Me
Slide 5: Advancing Sonoco's Strategy
ADVANCING SONOCO’S STRATEGY Howard Coker President and CEO Sonoco Investor Day 2024 |
Slide 6: Key Takeaways
KEY TAKEAWAYS WHAT YOU WILL HEAR TODAY We set out on a transformation journey in 2020, and we have made good on our promises to date We built a stronger portfolio that is positioned to deliver value-creating growth We better unified our operating model to our advantage, with more efficiencies expect
Slide 7: People Build Businesses by Doing the Right Things
Our guiding principle remains unchanged since 1899: PEOPLE BUILD BUSINESSES BY DOING THE RIGHT THINGS Our Core Values Teamwork Service Respect Integrity Accountability Sonoco Investor Day 2024 | 7
Slide 8: Celebrating 125 Years of History
CELEBRATING 125 YEARS OF HISTORY 4,000+ Patents to date — Many of which you engage with on a daily basis $ Revenue Milestones +500 Patents since 2020 Spiro-Pac, composite UltraSeal $7B tubular invented Rigid Paper Container Smartseal containers launched business expands to invented $5B Asia & Brazil
Slide 9: Unified Sustainability Focus Across Sonoco
UNIFIED SUSTAINABILITY FOCUS ACROSS SONOCO Protecting our Investing in our Striving for environment people and transparency at the communities executive level Sonoco Investor Day 2024 | 9
Slide 10: Long-Standing Partnerships with Customers
LONG-STANDING PARTNERSHIPS WITH CUSTOMERS All trademarks, registered or unregistered, are the property of their respective owners. Specific ownership information available upon request. Sonoco Investor Day 2024 | 10
Slide 11: Value-Added Packaging
VALUE-ADDED PACKAGING Principles central to where we play Advanced Market Material Science Dynamics High Product Large / Global Functionality Customers Continuous process Manufacturing How We Win Guiding Principle Serving Operational Innovation Culture People Build Customers Execution Businesses Son
Slide 12: We Set Out to Do More... Our Transformation Journey
WE SET OUT TO DO MORE... OUR TRANSFORMATION JOURNEY 2024 –2028 Next Era Goals 2024 - 2025 Portfolio Alignment 2022-2023 2020-2021 Focus the Organization for the Future Establish the Foundation Sonoco Investor Day 2024 | 12
Slide 13: Establish the Foundation
Transformation Journey Step 1 ESTABLISH THE FOUNDATION 2024 –2028 Next Era Goals 2024 - 2025 Portfolio Alignment 2022-2023 2020-2021 Focus the Organization for the Future Establish the Foundation • Portfolio Analysis • Operating Model Design Sonoco Investor Day 2024 | 13
Slide 14: Establish the Foundation
ESTABLISH THE FOUNDATION Roles and Path to Portfolio Support at Standardize Selection Center Processes Process to determine Process to determine Process to standardize business value added roles at center Core versus non-core businesses processes in core functions SONOCO Integrated Business (Core) D
Slide 15: Focus the Organization
Transformation Journey Step 2 FOCUS THE ORGANIZATION 2024 –2028 Next Era Goals 2024 - 2025 Portfolio Alignment 2022-2023 2020-2021 Focus the Organization for the Future Establish the • Align the Organization Foundation • Focus for Greater Efficiency and • Portfolio Analysis Effectiveness • Operating
Slide 16: We Delivered
WE DELIVERED 4-Step Strategy — Our Last Investor Day Outcomes to Date Fewer, larger core Four non-core divestitures 1 Align the Organization for the future businesses to simplify and multiple product/site the portfolio rationalizations Leaner, more agile, and less Notable progress on 2 Focus the Org
Slide 17: Notable Progress Since 2021
NOTABLE PROGRESS SINCE 2021 Simplified Portfolio Invested Created a new CORE Refined and Executed (Phase 1) in CORE Platform – Metal Pkg Operating Strategy Defined CORE Increased Capex Value creation model and separated non-core businesses 2010 – 2019 <$200M/yr ALL OTHER Structural 12% ~$300M/yr Tra
Slide 18: Increased Profitability and Cash Flow
INCREASED PROFITABILITY AND CASH FLOW Execution of strategy drove improved results Adjusted EBITDA >$1B $1.6B+ $771M CUMULATIVE OPERATING CASH FLOW 2021–2023 2021 2023 Sonoco Investor Day 2024 | 18
Slide 19: Global Leader in High-Value, Sustainable Packaging
SONOCO At-a-Glance GLOBAL LEADER IN HIGH-VALUE, SUSTAINABLE PACKAGING FY 2023 Results Sales Breakdown Company BY SEGMENT Profile ~$5.5B Consumer Industrial All Other Estd. Market Cap 53% 35% 12% 1899 $6.8B BY SUBSTRATE 22K+ Revenue Employees Paper Resin Tinplate 57% 29% 14% $1,067M 300+ Adjusted EBI
Slide 20: Portfolio Alignment
Transformation Journey Step 3 PORTFOLIO ALIGNMENT 2024 –2028 Next Era Goals 2024 - 2025 Portfolio Alignment 2022-2023 • Building a New Strategic Platform (Flex-Therm Packaging) 2020-2021 Focus the Organization • Resolving the All Other segment for the Future • Organic Growth Investments Establish th
Slide 21: Resolving "All Other" Businesses
RESOLVING “ALL OTHER” BUSINESSES Steps we are taking 1 Improving Profitability across the businesses 2 Simplify Portfolio Integrate with Core or divest based on strategic assessment ~470 bps ~$200M Value from Divestitures UP TO S3 BulkSak Protective Solutions* Timber Assets $1B POTENTIAL Returning t
Slide 22: Flexibles & Thermoforming – Now Together
FLEXIBLES & THERMFORMING – NOW TOGETHER Five operations merged, streamlined, and augmented for growth New Platform Flexibles* $0.6B Thermoforming* $0.7B $1.3B ** Businesses in CORE and CORE returning from All Other CORE * 2023 Sales * * Proforma 2023 Sales Leverages anticipated THE NEW Allows us to
Slide 23: Defined 4 Businesses Within Core
DEFINED Consumer Industrial 4 BUSINESSES WITHIN CORE RIGID PAPER Based on Strategic Fit in terms of CONTAINERS Technology, Innovation, Customers, INDUSTRIAL and Sustainability PACKAGING Core Attributes FLEX-THERM PACKAGING ~ $6.2B Advanced Material Science 2023 Sales High Product Functionality Conti
Slide 24: Clear Investment Thesis Drives Our Focus
CLEAR INVESTMENT THESIS DRIVES OUR FOCUS Multi-substrate portfolio strength gives us edge over competition Expected Long Term SONOCO Core Business End-market Growth Investment Thesis RIGID PAPER High Single Digits Organic growth engine CONTAINERS Strong, secular tailwinds FLEX-THERM Mid-Single Digit
Slide 25: Becoming a Growth Company
Transformation Journey Step 4 BECOMING A GROWTH COMPANY 2024 –2028 Next Era Goals 2024 - 2025 • Maintain a Focused Portfolio Strategy Portfolio Alignment • Drive Further Profitable Growth 2022-2023 • Building New Strategic Platform • Operate with Discipline (Flex-Therm Packaging) 2020-2021 Focus the
Slide 26: Aligning Long-Range Plans to Achieve Enterprise Objectives
Next Era: Growth-oriented Disciplined Company ALIGNING LONG-RANGE PLANS TO ACHIEVE ENTERPRISE OBJECTIVES BUSINESS STRATEGY EXECUTION PLAYBOOK Enterprise DRIVE GROWTH Business Excellence DELIVER Strategy RESULTS Portfolio OPTIMIZE COSTS Financial Excellence Strategy Operational Excellence • Expand re
Slide 27: Delivering Results
DELIVERING RESULTS Building on Improved Financial Performance for the Next 5 Years 2028 GOALS $1.5B High Teens $4B – $5B Adjusted EBITDA Adjusted EBITDA Cumulative Operating Margin Cash Flow WITH A COMPETITIVE AND GROWING DIVIDEND Sonoco Investor Day 2024 | 27
Slide 28: Great Company, Primed for Greater Value Creation
GREAT COMPANY, PRIMED FOR GREATER VALUE CREATION Strong Company Well-positioned Sustainability focus Increasing value of innovation as differentiator Diversified portfolio Robust/sticky customer relationships Differentiated operating model Economic cycle resiliency Investing in growth Increasing val
Slide 29: The Right Team with the Right Experience
SONOCO Leadership Team THE RIGHT TEAM WITH THE RIGHT EXPERIENCE Today’s Speakers Howard Coker Rodger Fuller Rob Dillard Sean Cairns President and CEO Chief Operating Officer Chief Financial Officer President, Global Rigid Paper & Closures Russell Grissett James Harrell III Ernest Haynes III Jeff Tom
Slide 30: Elevating Sonoco's Operating Model
ELEVATING SONOCO’S OPERATING MODEL Rodger Fuller Chief Operating Officer Sonoco Investor Day 2024 |
Slide 31: Key Takeaways
KEY TAKEAWAYS ELEVATING SONOCO’S OPERATING MODEL Evolved our Operating Model in line with the transformation journey we started in 2020 Delivered strong results in Productivity and EBITDA margin improvements Plans in place to drive Operating model aligned with our Next Era strategy Deploying a balan
Slide 32: Defined 4 Businesses Within Core
DEFINED Consumer Industrial 4 BUSINESSES WITHIN CORE RIGID PAPER Based on Strategic Fit in terms of CONTAINERS Technology, Innovation, Customers, and INDUSTRIAL Sustainability PACKAGING Core Attributes FLEX-THERM PACKAGING ~ $6.2B Advanced Material Science 2023 Sales High Product Functionality Conti
Slide 33: An Evolving Operating Model
Structural Transformation AN EVOLVING OPERATING MODEL Prior to 2020 2020 – 2023 2023 – 2028 Plans 4 core businesses* 4 core businesses* +20 Business Units (regional P&Ls) (regional P&Ls) +10 ERP Systems 6 ERP Systems 3 ERP Systems — Fit for Business Purpose US-only Regional Global, low-cost Shared S
Slide 34: Building the Foundation for Our Evolving Portfolio Model
Recent Progress BUILDING THE FOUNDATION FOR OUR EVOLVING PORTFOLIO MODEL Adjusted EBITDA Goals Set in 2021 GOAL $1,000M Structural Strategic Capital Transformation Investment Sustainability Excellence Operational Excellence Programs Supply Chain Excellence Excellence in all 4 self help focused areas
Slide 35: Resulting in Margin Improvements
Recent Progress RESULTING IN MARGIN IMPROVEMENTS Adjusted EBITDA Margin High Teens Excellence Programs 15.7% Standardization, Digital, M&A Integration 13.8% Productivity Fixed-cost Efficiency with Scale Economic Cyclicality Inflation 2018 2023 2024-28 Target Sonoco Investor Day 2024 | 35
Slide 36: Our Execution Playbook
OUR EXECUTION PLAYBOOK Fewer, bigger businesses enable a more streamlined operating model DRIVE GROWTH OPTIMIZE COSTS DEVELOP TALENT ADVANCE SUSTAINABILITY Business Excellence Operational Excellence People Excellence Environmental Excellence Design Innovation Supply Chain Holistic Safety Business Al
Slide 37: Three Key Enablers Supporting Excellence
THREE KEY ENABLERS SUPPORTING EXCELLENCE STANDARDIZATION DIGITAL TRANSFORMATION M&A INTEGRATION Standardize Shared Automation / Industry 4.0 Communication and Services Processes for Manufacturing Change Management Harmonize Technology Next-gen Digital for Operational and and Systems Commercial teams
Slide 38: Driving Growth via Customer-Centricity
Business Excellence DRIVING GROWTH VIA CUSTOMER-CENTRICITY Design Customer Service, Delivery, Commercial Innovation Partnerships and Quality Excellence • Customer Challenges • Investing Side-by-side with our • Part of Sonoco DNA • Price for Value • New Product Innovation Customers • Focus on high yi
Slide 39: Comprehensive Cost Optimization
Operational Excellence COMPREHENSIVE COST OPTIMIZATION Manufacturing Supply Chain Sonoco Performance System Strong partnerships (Lean, Six Sigma) Transportation Management System New on-line equipment Automated Indirect Sourcing monitoring software Buy Desk Initiatives Footprint consolidations PRODU
Slide 40: Investing in Future-Ready Capabilities
Operational Excellence INVESTING IN FUTURE-READY CAPABILITIES Building Proprietary Investing in Equipment Technology Automation Capabilities Investing $10M in a new advanced Aligning internal capabilities machinery manufacturing center with external partnerships Sonoco Investor Day 2024 | 40
Slide 41: Targeting $300-$500M in Productivity Over 2024-28
Operational Excellence TARGETING TOTAL $300-$500M IN PRODUCTIVITY OVER 2024-28 Automation Capacity Digital Global Business Investments Capabilities Services Sonoco Investor Day 2024 | 41
Slide 42: Embedding a Safety-First Culture
People Excellence EMBEDDING A SAFETY-FIRST CULTURE Deploying Doing Safety Differently Program Average Recordable Rate - Global 4.0 3.6 World Class Safety Performance 3.5 and a commitment to the elimination of LCEs 3.0 2.5 2.0 Committed to Psychological Safety Partnering with DEI leadership to focus
Slide 43: Driving Engagement & Talent Initiatives
People Excellence DRIVING ENGAGEMENT & TALENT INITIATIVES EMPLOYEE ORGANIZATIONAL TALENT ACQUISITION ENGAGEMENT DEVELOPMENT & RETENTION Leadership Development Rigorous Process Inclusivity Focus as a core competency to acquire talent for the right roles Performance Culture Performance Management Proc
Slide 44: Strong Enterprise Alignment
Environmental Excellence STRONG ENTERPRISE ALIGNMENT Sustainability Activities rcular Econom Linked to Businesses Ci y Metal Flex- Pack Therm Sustainability Testing Recyclability Assessments & & Data Acceptance Roadmaps & Labels RPC Sustainability Industrial Center Functions Cl t im a c Customer & T
Slide 45: What's Changing with Our Customers
Environmental Excellence WHAT’S HOW SONOCO IS RESPONDING CHANGING FOCUS ON CIRCULAR ECONOMY Goal: Produce more sustainable WITH OUR products across all substrates CUSTOMERS What we’re doing: • Reducing environmental impact via circular design • Providing thought leadership to develop industry recycl
Slide 46: Focus on Climate Change Impact
Environmental Excellence FOCUS ON CLIMATE CHANGE IMPACT How we are reducing emissions DRIVING SUSTAINABLE PURCHASING LOWERING OPERATIONS POWER ENERGY USE Waco, TX | Flex-Therm • Solar Installation 2024 • LED Lighting Signed VPPA Plant Systems • Compressed Air System Optimization Agreement Optimizati
Slide 47: Delivering on Our Commitments
Environmental Excellence DELIVERING ON OUR COMMITMENTS * Protecting our Investing in our people Striving for transparency environment and communities at the executive level 2.7% >20% 26% 32% 45% 98.8% YoY decrease in YoY decrease in GHG Female Workforce Female New Hires Board Diversity Rate Average
Slide 48: Key Takeaways
KEY TAKEAWAYS ELEVATING SONOCO’S OPERATING MODEL Evolved our Operating Model in line with the transformation journey we started in 2020 Delivered strong results in Productivity and EBITDA margin improvements Plans in place to drive Operating model aligned with our Next Era strategy Deploying a balan
Slide 49: Business Updates
BUSINESS UPDATES $3.8B $2.4B Consumer Packaging Segment Industrial Paper Pkg Segment Rigid Paper Containers Metal Packaging Flex-Therm Industrial Paper These two segments represent 88% of 2023 Sonoco Net Sales; rest is All Other Sonoco Investor Day 2024 | 49 Excludes All Other Sales for 2023; assume
Slide 50: Solidifying Our Leadership in Rigid Paper Containers
CONSUMER PACKAGING SEGMENT SOLIDIFYING OUR LEADERSHIP IN RIGID PAPER CONTAINERS Sean Cairns President, Global Rigid Paper Containers Sonoco Investor Day 2024 |
Slide 51: Key Takeaways
KEY TAKEAWAYS RIGID PAPER CONTAINERS (RPC) RPC is a preferred substitution substrate as manufacturers transition to more sustainable packaging Sonoco is the global leader in RPC, and uniquely positioned to take advantage of secular tailwinds We are executing on our strategy to drive sales growth glo
Slide 52: Rigid Paper Containers (RPC)
RIGID PAPER CONTAINERS (RPC) FOOD & HOUSEHOLD HEALTH & BEVERAGE PERSONAL CARE Sonoco Investor Day 2024 | 52
Slide 53: Global Leader in a Growing Space
GLOBAL LEADER IN A GROWING SPACE RPC Overview FY 2023 Results Long Term Outlook Business Profile $1.5B HSD • Leading Positions in Markets with outstanding brands * • Existing Products in new Geographies & new Products in new Markets Revenue Revenue Growth CAGR • Strong Innovation Pipeline Estd. • Te
Slide 54: Macro Trends Favorable
MACRO TRENDS FAVORABLE Paper is a preferred substrate for CPGs focused on sustainability TAM ~$3B Incremental Global TAM* Opportunity SUSTAINABILITY INNOVATION INTERNATIONAL GROWTH for New Customers/Markets Trends • Consumer preferences • Need for medium & high barrier packaging • Large food custome
Slide 55: International Growth
INTERNATIONAL GROWTH Investing in manufacturing capacity globally Trends in food category growth Current site, no changes planned by 2028 New Site, will open by 2028 Expansion site rates favorable to RPC SIGNIFICANT GROWTH POTENTIAL New growth from food customers expanding globally North America Eur
Slide 56: Future-Proofing Pringles in the Evolving EU Marketplace
CASE STUDY - SUSTAINABILITY SOLUTION The 90% Paper Pringles Can Development and implementation FUTURE-PROOFING of our patent pending technology for paper bottom ends for high-speed production lines and PRINGLES IN THE influencing country regulations while future- proofing can design EVOLVING EU MARK
Slide 57: Partnering with Chocolates Valor to Meet Their ESG Targets
CASE STUDY - SUSTAINABILITY SOLUTION Sonoco GreenCan® 92-98% Fiber • Increased the Fiber content by moving from a metal-based paper can into a full paper can with an integrated paper lid. • Sonoco’s patented GreenCan® solution is recyclable & repulpable, while maintaining food freshness through the
Slide 58: Innovative De-Gassing Paper Can
CASE STUDY - INNOVATION SOLUTION The 95% Paper INNOVATIVE • Sonoco’s R&D team developed a can that meets customer’s DE-GASSING barrier specifications • Designed a patent pending de-gassing valve application onto PAPER CAN the membrane SOLUTION • Designed a fully recyclable paper can-body with plasti
Slide 59: Committed to Delivering Growth
COMMITTED TO DELIVERING GROWTH Long-term Targets Aligned to Enterprise Strategy 2028 GOAL HSD High Growth & >>SONOCO Teens Efficiency Corporate Average Focused Revenue Growth Adjusted CAPEX ROIC CAGR EBITDA (2024-28) GROWTH-FOCUSED BUSINESS READY TO DISRUPT THE MARKET Sonoco Investor Day 2024 | 59
Slide 60: Key Takeaways
KEY TAKEAWAYS RIGID PAPER CONTAINERS (RPC) RPC is a preferred substitution substrate as manufacturers transition to more sustainable packaging Sonoco is the global leader in RPC, and uniquely positioned to take advantage of secular tailwinds We are executing on our strategy to drive sales growth glo
Slide 61: Metal Packaging
CONSUMER PACKAGING SEGMENT OUR NEWEST CORE PLATFORM METAL PACKAGING Ernest Haynes President, Sonoco Metal Packaging Sonoco Investor Day 2024 |
Slide 62: Key Takeaways
KEY TAKEAWAYS METAL PACKAGING Metal Cans are one of the best circular economy packaging products Successful acquisition of the Ball Metal Packaging business in 2022 – integration complete and synergies ahead of plan Making strong investments in manufacturing and capabilities to further our competiti
Slide 63: Metal Packaging Acquisition Recap
METAL PACKAGING Sonoco M&A Strategy Fit ACQUISITION RECAP Strong Synergies • 12 Plant Footprint w/ Location Driven Why Metal Cans? Economics • Meets Sonoco value-added • Streamlined Org Structure Role in Sonoco packaging criteria Portfolio • Stable sector, strong cash flow, & Enhances Profitable Gro
Slide 64: Outstanding Sustainability Characteristics
OUTSTANDING SUSTAINABILITY CHARACTERISTICS Recycle Cart 58% #1 most recycled food packaging Recycling Rate of Metal Cans substrate Steel Sorting Cans METAL 75% Infinitely recyclable with no loss in of All Steel Ever Produced material quality Steel Cans TM Recycles forever is Still in use Today 33% M
Slide 65: Sonoco Metal Packaging (SMP)
SONOCO METAL PACKAGING (SMP) What we make STEEL STEEL FOOD AND STEEL & ALUMINUM AEROSOL CANS BEVERAGE CANS COMPONENTS AND CLOSURES Sonoco Investor Day 2024 | 65
Slide 66: Scaled & Strategic Platform
SCALED & STRATEGIC PLATFORM Metal Packaging Overview FY 2023 Results Long Term Outlook Business Profile ~$1B LSD • Steel Cans - one of the world’s top circular economy adapted products * • Sonoco Metal Packaging boasts 12 operations across the US, granting extensive access to customers in the food a
Slide 67: Targeted Markets & Growth
Spray Paint Household Products TARGETED Aerosol Aerosol MARKETS & Spray paints allow for quick applications with limited Aerosol offers most precise & convenient application of GROWTH clean-up and unintended mess. Market remains steady. product, consumers trend towards use. TREND DRIVERS Growth Prof
Slide 68: Making Strong Investments
MAKING STRONG INVESTMENTS Optimized Deployed Ops Invested in Footprint Excellence Programs New Product Capabilities • Established flat-sheet production Centers • Rolled out Sonoco’s lean • Launched three new 2-pc food lines, of Excellence manufacturing system co-located critical operation w/ a custo
Slide 69: Deep Customer Collaboration
DEEP CUSTOMER We are focused on solving COLLABORATION our customers’ biggest challenges Sonoco maintains strategic alliances Speed Reduced costs High pack with key customers to market and lead times functionality Can Manufacturing is Highly Specialized and Capital Intensive – We Have the Resources C
Slide 70: Co-locate and Drive Synergies
CASE STUDY - CUSTOMER PARTNERSHIP SOLUTION Co-locate and drive synergies • Joint Investment: Sonoco and Bush's collectively invested $30 million in a new 2-piece 307 line • New line built and co-located with Bush’s production facility in Tennessee RESULTS • Partnership streamlines can BACKGROUND SKU
Slide 71: On Track to Deliver
ON TRACK TO DELIVER Long-term Targets Aligned to Enterprise Strategy 2028 GOAL LSD Mid- Technology ~Sonoco Teens & Efficiency CORPORATE AVERAGE FOCUSED Revenue Growth Adjusted CAPEX ROIC CAGR EBITDA (2024-28) STABLE, DEFENSIVE BUSINESS WITH STEADY CASH FLOW THRIVE IN OUR ROLE IN THE ENTERPRISE PORTF
Slide 72: Key Takeaways
KEY TAKEAWAYS METAL PACKAGING Metal Cans are one of the best circular economy packaging products Successful acquisition of the Ball Metal Packaging business in 2022 – integration complete and synergies ahead of plan Making strong investments in manufacturing and capabilities to further our competiti
Slide 73: 2024 Investor Day
2024 INVESTOR DAY Sonoco Investor Day 2024 | 73
Slide 74: Our New, Scaled Flexibles and Thermoforming Platform
CONSUMER PACKAGING SEGMENT OUR NEW, SCALED FLEXIBLES AND THERMOFORMING PLATFORM Russell Grissett President, Global Flexibles and Thermoforming Sonoco Investor Day 2024 |
Slide 75: Key Takeaways
KEY TAKEAWAYS FLEX-THERM Flexibles and Thermoforming are large, fragmented industries; Sonoco is focused on niche markets where higher-value solutions are needed by customers Flex-Therm creates a scaled and integrated platform to grow organically and inorganically to support customers with innovatio
Slide 76: Flexibles & Thermoforming – Now Together
FLEXIBLES & THERMFORMING – NOW TOGETHER Five operations merged, streamlined, and augmented for growth New Platform Flexibles* $0.6B Thermoforming* $0.7B $1.3B ** Businesses in CORE and CORE returning from All Other CORE * 2023 Sales * * Proforma 2023 Sales Leverages anticipated THE NEW Allows us to
Slide 77: The New, Combined Platform Is Advantaged
THE NEW, COMBINED PLATFORM IS ADVANTAGED GO-TO-MARKET MODEL Markets: 50% End Market Overlap Customers: Only 18% Customer Overlap Current Revenue to Customers 2023 $ sales by end markets 2023 $ sales by customers Purchasing Both Lidding & Thermoforming $150M+ FLEX TF FLEX TF 42% 48% 10% 43% 18% 39% F
Slide 78: Our Primary Product Lines
OUR PRIMARY PRODUCT LINES Snacks Condiments Healthcare Prepared Meals Fresh Produce Coffee & Pet Sonoco Investor Day 2024 | 78
Slide 79: Integrated Flex-Therm Platform
INTEGRATED FLEX-THERM PLATFORM Flex-Therm Overview FY 2023 Results Long Term Outlook Business Profile • Focused on value-added segments in focused geographies $1.3B MSD * • Strong innovation pipeline Revenue Revenue Growth • Leading positions in niche markets with outstanding brands 1993 • Sustainab
Slide 80: Favorable Macro Trends
FAVORABLE MACRO TRENDS As a combined Flexible and Rigid Thermoforming Business, we are well-positioned to provide total package solutions TAM $7.5B TAM* aligned with our niche focus SUSTAINABILITY BETTER FOR YOU CONVENIENCE CUSTOMIZATION Trends • Sustainability is gaining • Healthy snacking has sign
Slide 81: Sustainability Is a Major Growth Driver
SUSTAINABILITY IS A MAJOR GROWTH DRIVER MONO-MATERIAL FIBER-BASED RECYCLED CONTENT SOURCE REDUCTION Designed Designed Reducing Virgin Reducing for Recycling for Recycling Plastic Content Material Usage WELL-POSITIONED TO CAPITALIZE ON OPPORTUNITIES FROM FUTURE REGULATIONS IN THE US Sonoco Investor D
Slide 82: Better for You and the Environment
CASE STUDY: BETTER FOR YOU + SUSTAINABILITY SOLUTION EnviroServe® SmartSeal® Fresh A complete, patented system developed exclusively for the fresh BETTER FOR YOU produce market. A strong display for brands, reduction in material usage, product waste, and positioned for the circular economy AND THE E
Slide 83: Drive Circular Economy with PET Trays
CASE STUDY: SUSTAINABILITY + INNOVATION SOLUTION Natural CPET Tray Sonoco created an important solution by designing an unpigmented tray, called the Natural Tray, that is NIR-detectable, contains 30% DRIVE recycled PET materials, and the ability to be captured in a Material Recovery Facility (MRF).
Slide 84: Pentel Reimagines Blister Packs to Paper Alternative
CASE STUDY: SUSTAINABILITY + INNOVATION SOLUTION PaperBlisterTM Pack • Sonoco collaborated to create an award-winning solution by designing a 100% paper-solution to replace the blister pack PENTEL REIMAGINES • Sonoco’s R&D and Account Teams delivered expertise and insights to create a pack that main
Slide 85: Executing with a Growth Focus
EXECUTING WITH A GROWTH FOCUS Long-term Targets Aligned to Enterprise Strategy 2028 GOAL MSD Mid- Growth & ~SONOCO Teens Efficiency Corporate Average Focused Revenue Growth Adjusted CAPEX ROIC CAGR EBITDA (2024-28) GROWING EBITDA AND STAYING CAPITAL-EFFICIENT Sonoco Investor Day 2024 | 85
Slide 86: Key Takeaways
KEY TAKEAWAYS FLEX-THERM Flexibles and Thermoforming are large, fragmented industries; Sonoco is focused on niche markets where higher-value solutions are needed by customers Flex-Therm creates a scaled and integrated platform to grow organically and inorganically to support customers with innovatio
Slide 87: Leading Global Provider of Sustainable Paper (URB) and Converted Products
INDUSTRIAL PAPER PACKAGING SEGMENT LEADING GLOBAL PROVIDER OF SUSTAINABLE PAPER (URB) AND CONVERTED PRODUCTS James Harrell President, Global Industrial Paper Packaging Sonoco Investor Day 2024 |
Slide 88: Key Takeaways
KEY TAKEAWAYS INDUSTRIAL PAPER PACKAGING Vertically integrated, global leader in Uncoated Recycled Paperboard (URB) and converted products Optimizing our footprint and commercial capabilities to improve profitability and better manage business cycles Our new investments, focus on automation, and ope
Slide 89: Industrial Paper Packaging Segment Overview
INDUSTRIAL PAPER PACKAGING Segment Overview FY 2023 Results 2023 Revenue by Region $2.4B BY REGIONS Estd. Revenue North America EMEA APAC 1899 71% 16% 10% 3% Long Term Outlook South America 9.9K+ Employees LSD * 2023 Revenue by End Use Markets Revenue Growth 160 BY END MARKETS Facilities Business Pr
Slide 90: Consolidated Leadership and Business Strategies into One Global Platform
Our Global Network CONSOLIDATED LEADERSHIP AND BUSINESS STRATEGIES INTO ONE POWERFUL, GLOBAL PLATFORM 2.1 Million Tons of Global URB Capacity Network Improvement # Mills # Converting Summary Expansions for growth markets Footprint consolidations North America Europe 12 55 6 24 M&A for regional and m
Slide 91: Transformed Business to Improve Results
TRANSFORMED BUSINESS TO IMPROVE RESULTS Adjusted EBITDA Operational Excellence Commercial Excellence Industrial Segment • Exited low return Medium business • Realigned pricing models from legacy cost-based inputs 18.2% • Moving production to mills with lower production costs • Increased focus on val
Slide 92: Automation Integral to Sonoco's Productivity Targets
AUTOMATION INTEGRAL TO SONOCO’S PRODUCTIVITY TARGETS Automation via Robotics Shopfloor Automated Data Collection Optimizing cost structure and addressing Helping us be more efficient workforce shortage challenges and nimble in factory operations Sonoco Investor Day 2024 | 92
Slide 93: Industrial Paper Packaging Vertically Integrated URB Leader
INDUSTRIAL PAPER PACKAGING VERTICALLY INTEGRATED URB LEADER SONOCO’S VALUE CHAIN 48% URB Paper Sales* to External Customers 24 Recycling Uncoated Recycled Plants Paperboard (URB) 1.7M 22 Mills 52% URB Paper Sales* to Tons of Fiber 29 machines Sonoco Internal Recovered 2.1M Tons/Year (Consumer & Indu
Slide 94: URB Products: External Customers and Sonoco Internal
48% URB Paper Sales* to URB PRODUCTS What Our External Customers Make Tissue and Towel Floor Paper Coreboard Food Packaging Customers 52% URB Paper Sales* to CONVERTED URB PRODUCTS Textile Cones & Cores Protective Posts Partitions What Sonoco Sonoco Internal Makes (Consumer & Industrial Products) Pa
Slide 95: Sonoco URB Paper to External Customers
SONOCO Third Party Sales URB PAPER TO EXTERNAL End Customer Segment % of Sales CUSTOMERS Consumer Staples Tissue and Towel Food Packaging 48% Sheets Consumer Discretionary Coreboard Roll Packaging 38% Edgeboard Sheets Industrial and Other Construction Floor Paper 14% Sonoco Investor Day 2024 | 95
Slide 96: Sonoco Converted URB Products
SONOCO Tubes Cores Cones Posts Partitions CONVERTED What URB we make PRODUCTS Customer use End- consumer Product Other Cons. Staple 17% 37% 2023 Sonoco Converted URB >68% Sales of Sonoco’s Converted Breakdown Product end market sales Industrial Cons. Durable are consumer-oriented 16% 30% Sonoco Inve
Slide 97: Positive Market Trends for Industrial Paper Products
POSITIVE MARKET TRENDS FOR INDUSTRIAL PAPER PRODUCTS Trend Implications URB paper is inherently sustainable. Demand is To support customer demand, align roadmaps Food Packaging + growing as CPG companies prefer URB as a for technology, capacity, and geographies with Sustainability substitution subst
Slide 98: European Appliances Industry: Driving Sustainable Packaging Growth
CASE STUDY - SUSTAINABILITY SOLUTION Sonopost® Europe Sonopost® and Linear Draw EUROPEAN • Port Sonoco’s proven solutions of Sonopost® to the European market APPLIANCES • Installed production capacity in countries with strong appliance INDUSTRY: DRIVING manufacturing presence SUSTAINABLE PACKAGING G
Slide 99: Eliminating the Decades Old Chew-Out Issue
CASE STUDY - INNOVATION SOLUTION Core Chew-out Solutions T2 – Torque Transmission Technology • Sonoco developed T2 technology to address ELIMINATING THE the chew-out issue DECADES OLD • The T2 Technology is patented, developed, and commercialized globally CHEW-OUT ISSUE RESULTS Torque Resistance 800
Slide 100: On Track to Deliver
ON TRACK TO DELIVER Long-term Targets Aligned to Enterprise Strategy 2028 GOAL LSD High Efficiency > Sonoco Teens FOCUSED CORPORATE AVERAGE Revenue Growth Adjusted CAPEX ROIC CAGR EBITDA (2024-28) EBITDA & CASH FLOW FOCUS STRONG, STABLE POSITION IN THE ENTERPRISE PORTFOLIO Sonoco Investor Day 2024 |
Slide 101: Key Takeaways
KEY TAKEAWAYS INDUSTRIAL PAPER PACKAGING Vertically integrated, global leader in Uncoated Recycled Paperboard (URB) and converted products Optimizing our footprint and commercial capabilities to improve profitability and better manage business cycles Our new investments, focus on automation, and ope
Slide 102: Financial Strategy & Outlook
FINANCIAL STRATEGY & OUTLOOK Rob Dillard Chief Financial Officer
Slide 103: Great Company, Primed for Greater Value Creation
GREAT COMPANY, PRIMED FOR GREATER VALUE CREATION Strong Company Well-positioned Sustainability focus Increasing value of innovation as differentiator Diversified portfolio Robust/sticky customer relationships Differentiated operating model Economic cycle resiliency Investing in growth Increasing val
Slide 104: 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 Sonoco Investor Day 2024 | 104
Slide 105: Foundation of Improvement
FOUNDATION OF IMPROVEMENT 2022 AND 2023 WERE RECORD YEARS IN SONOCO’S 125-YEAR HISTORY 2020 – 2023 JOURNEY $6.8B $1,067M $5.26 1 Align the Organization NET SALES ADJ. EBITDA ADJ. EPS for the future $ Billions $ Millions $ / Diluted Share 2 Focus the Organization +29% +35% +38% with greater efficienc
Slide 106: Dividend Is Foundational
DIVIDEND IS FOUNDATIONAL $2.02 DRIVES DISCIPLINE AND $1.92 SHAREHOLDER VALUE $1.80 Dividend in $s $1.70 $1.72 $1.62 $1.54 $1.46 $1.37 $1.27 $1.23 $1.19 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 40 Years of Consecutive Annual Increases 98 Consecutive Years Paid Sonoco Investor Day 2
Slide 107: Disciplined Capital Structure to Protect and Fund What's Next
DISCIPLINED CAPITAL STRUCTURE TO PROTECT AND FUND WHAT’S NEXT ($ in millions) Strong Access to Debt Maturity Profile Capital and Liquidity 600 Investment grade credit rating 575 537 500 4.1% BBB Baa2 cost of S&P Moody’s 400 debt 300 Improved liquidity with expectation to increase further 2024 2025 2
Slide 108: Disciplined Capital Structure to Protect and Fund What's Next
DISCIPLINED CAPITAL STRUCTURE TO PROTECT AND FUND WHAT’S NEXT 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 2025 Potential for <2.0x in 2025 excluding acquisitions Ball Metal RTS and and divestitures Packaging Chattanooga Mill Sonoco Investor
Slide 109: What's Next
WHAT’S NEXT Adjusted EBITDA ($M) Adjusted EBITDA Margin % 2028E $1.5B EBITDA 20.0% Targeting High Teens Adj. EBITDA Margin Cumulative Operating Cash $1,500 Flow of $1,000 15.0% $4 – $5B Through 2028 $500 $0 10.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2028E Sonoco Investor Day 2024 |
Slide 110: Next Steps: Key Pillars of Our Disciplined-Growth Strategy
NEXT STEPS KEY PILLARS OF OUR DISCIPLINED-GROWTH STRATEGY Margin Business Dynamic Capital Active Portfolio Improvement Specific Growth Allocation Management Plans Strategies Sonoco Investor Day 2024 | 110
Slide 111: Margin Improvement Plans
Margin Improvement Plans MARGIN IMPROVEMENT PLANS Adjusted EBITDA Margin High Teens Excellence Programs 15.7% Standardization, Digital, M&A Integration 13.8% Productivity Fixed-cost Efficiency with Scale Economic Cyclicality Inflation 2018 2023 2024-28 Target Sonoco Investor Day 2024 | 111
Slide 112: Business Specific Growth Strategies
Business Specific Growth Strategies BUSINESS SPECIFIC GROWTH STRATEGIES DRIVING RETURNS WITH M&A UPSIDE Organic Optional M&A Optional M&A M&A $1,500 Organic Growth Organic Growth $1,067 Innovation Cyclical Recovery Organic Growth Operational Improvement 2023 Industrial Paper Rigid Paper Flexibles an
Slide 113: Dynamic Capital Allocation
Dynamic Capital Allocation DYNAMIC CAPITAL ALLOCATION ACTIONING STRATEGIES THROUGH TARGETED INVESTMENT Consumer Industrial Flexibles and Business RPC Metal Pkg Industrial Paper Thermoforming Revenue Growth Target HSD MSD+ LSD++ LSD 2024-28 CAGR Dynamic Capital EBITDA Margin Target High Teens Mid-Tee
Slide 114: M&A Is a Key Strategic Lever
Active Portfolio Management WIDE APERTURE, TIGHT FILTER M&A IS A KEY STRATEGIC LEVER Strategic Fit • Align with “Value-Added Packaging” Scalability • Market size / position DRIVING principals • Adds to capabilities SHAREHOLDER VALUE • Differentiated ability to run assets • Enhances ability to serve
Slide 115: "Right to Win" Acquisitions
Active Portfolio Management “RIGHT TO WIN” ACQUISITIONS DRIVING DIFFERENTIATED SHAREHOLDER VALUE 2020 2023 2024-2025 RPC Flex-Therm Industrial Flex-Therm Focus on Programmatic M&A to augment Metal Industrial core capabilities Strategic Fit Scalability Cultural Fit Next focus on Flex-Therm Financial
Slide 116: Divest to Reallocate Capital
Active Portfolio Management DIVEST TO REALLOCATE CAPITAL REPOSITION CAPITAL TO CORE FRANCHISES All businesses have Evaluating portfolio Considering Sequencing meaningful value based on fit businesses divestitures to and geographies maximize value Recent Divestitures 2020 2023 2024-2025 Evaluating Ti
Slide 117: Active Portfolio Management
Active Portfolio Management ACTIVE PORTFOLIO MANAGEMENT TRANSFORMING TO A CONSUMER-ORIENTED GROWTH COMPANY 11% Display and Packaging 41% 12% All Other 53% ~75% Consumer Consumer Consumer 10% Packaging Packaging Packaging Protective Solutions 2018 2023 2028 38% 35% ~25% Paper and Industrial Industria
Slide 118: Strong Execution to Drive Future Results
STRONG EXECUTION TO DRIVE FUTURE RESULTS 2028 TARGETS Portfolio Adjusted EBITDA Cash Flow Capital Strategy ~75% Consumer $1.5B $4B - $5B INVESTMENT Packaging Target in 2028 Cumulative through 2028 GRADE MSD+ High Teens Dynamic Capital Dividend to Growth Adjusted EBITDA Allocation Reward Margin Share
Slide 119: Key Takeaways
KEY TAKEAWAYS WHAT YOU HEARD TODAY We set out on a transformation journey in 2020, and we have made good on our promises to date We built a stronger portfolio that is positioned to deliver value-creating growth We better unified our operating model to our advantage, with more efficiencies expected o
Slide 120: Investor Day 2024
& 2024 INVESTOR DAY Sonoco Investor Day 2024 | 120
Slide 121: Appendix: Reconciliation of GAAP and Non-GAAP Information
APPENDIX RECONCILIATION OF GAAP AND NON-GAAP INFORMATION Year-ending: December 31, 2023
Slide 122: EPS Summary
EPS Summary 2023 Vs. 2022 Fourth Quarter Year to Date 2023 2022 2023 2022 GAAP EPS $ 0.82 $ 0.98 $ 4.80 $ 4.72 Addback for: Acquisition and divestiture related costs, net 0.02 0.06 0.20 0.53 LIFO Reserve change (0.01) 0.03 (0.09) 0.22 Acquisition intangibles amortization expense 0.18 0.15 0.66 0.62
Slide 123: P&L Summary (Adjusted) Fourth Quarter
P&L Summary (Adjusted) Fourth Quarter: 2023 Vs. 2022 (Dollars in millions) Better / (Worse) 2023 2022 $ % Net sales $1,636 $1,676 $(40) (2.4) % Gross profit 338 317 20 6.4 % SG&A Expenses, net of Other Income (171) (133) (37) (28.1) % Operating profit $167 $184 $(17) (9.3) % Net interest (32) (29) (
Slide 124: P&L Summary (Adjusted) Year to Date
P&L Summary (Adjusted) Year to date: 2023 Vs. 2022 (Dollars in millions) Better / (Worse) 2023 2022 $ % Net sales $6,781 $7,251 $(470) (6.5) % Gross profit 1,424 1,501 (77) (5.1) % SG&A Expenses, net of Other Income (620) (581) (39) (6.8) % Operating Profit $804 $920 $(116) (12.5) % Net interest (12
Slide 125: Balance Sheet
Balance Sheet (Dollars in millions) 12/31/2023 12/31/2022 Change $ Cash and cash equivalents $152 $227 $(75) Trade accounts receivable, net of allowances 905 863 42 Other receivables 107 99 8 Inventories 774 1,096 (322) Prepaid expenses 113 76 37 Current Assets $2,051 $2,361 $(310) Property, plant a
Slide 126: Segment Analysis
Segment Analysis Year to date: 2023 Vs. 2022 (Dollars in millions) Net Sales Segment Operating Profit 2023 2022 % Chg 2023 2022 % Chg Consumer Packaging $3,627 $3,768 (3.7) % $382 $526 (27.4) % Industrial Paper Packaging 2,374 2,685 (11.6) % 318 328 (3.0) % All Other 780 798 (2.2) % 104 66 57.2 % $6
Sonoco Products Company — Investor Day (February 2024) on 6ix