| Management's Discussion and Analysis of Financial Condition and Results of Operations. |
FORWARD-LOOKING STATEMENTS
Statements included in this Quarterly Report on Form 10-Q that are not historical in nature, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, 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 (the "Exchange Act"). In addition, Sonoco Products Company (the "Company" or "Sonoco") and its representatives may from time to time make other oral or written statements that are also "forward-looking statements." Words such as "aim," "achieve," "anticipate," "assume," "believe," "can," "commit," "consider," "continue," "could," "develop," "estimate," "expect," "focus," "forecast," "foresee," "future," "goal," "guidance," "intend," "is designed to," "likely," "maintain," "may," "might," "objective," "ongoing," "opportunity," "outlook," "persist," "plan," "position," "possible," "potential," "predict," "project," "remain," "seek," "should," "strategy," "target," "will," "would," or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
•supply chain disruptions and availability and supply of raw materials and energy, and offsetting high raw material, energy, and logistics costs;
•the effects of economic downturns, changing tariffs or trade policy, inflation, volatility and other macroeconomic factors on the Company and its industry, including the Company's ability to manage such matters and their effects on suppliers, consumers and customers;
•the resiliency of the Company's operating model;
•consumer and customer actions in connection with political, social, and economic instability, war and other geopolitical tensions;
•the Company's ability to improve productivity, reduce its cost structure and the effects thereof;
•the Company's integration of Titan Holdings I B.V. ("Eviosys") and the Company's ability to realize the anticipated benefits of the acquisition, and the effects and timing of, and anticipated costs, synergies and gains resulting from any other contemplated, pending, and completed acquisitions;
•effects and anticipated gains and costs of the Company's portfolio simplification activities, including with respect to streamlining of the Company's organizational structure and any contemplated, pending, and completed divestitures, including the Company's sale of its Thermoformed and Flexibles Packaging business and its global Trident business (collectively, "TFP"), and its ThermoSafe business ("ThermoSafe");
•adequacy and anticipated amounts and uses of cash flows;
•capital allocation, including expected amounts of capital spending;
•the Company's capital structure, including the incurrence of debt and the repayment of debt;
•the Company's ability to adhere to restrictive covenants in its debt agreements;
•financial and business strategies and the results expected of them;
•producing improvements in earnings and profitable sales growth and rates of growth;
•market opportunities and anticipated growth thereof;
•expected impact and costs of resolution of legal proceedings;
•expected impact of new and changing regulations;
•extent and adequacy of provisions for, environmental liabilities and the cost of compliance with environmental laws and regulations;
•the Company's focus on sustainability and reducing its carbon emissions;
•adequacy of income tax provisions, realization of deferred tax assets, outcomes of uncertain tax issues and tax rates;
•goodwill impairment charges and fair values of reporting units;
•future asset impairment charges and fair values of assets;
•anticipated contributions to pension and postretirement benefit plans, fair values of plan assets, and long-term rates of return on plan assets;
•expected impact of implementation of new accounting pronouncements;
•creation of near-term and long-term value and returns for shareholders, including through the continued payment of dividends; and
•planned stock repurchases.
SONOCO PRODUCTS COMPANY
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:
•ability to manage the mix of business;
•ability to identify suitable acquisitions at the levels needed to meet growth targets;
•ability to satisfy closing conditions and close acquisitions, and to finance such acquisitions on acceptable terms;
•ability to successfully integrate newly acquired businesses, including Eviosys, into the Company's operations, retain key employees, maintain relationships with customers and other third parties, and realize expected cost savings, synergies and other anticipated benefits relating thereto within the expected time period, or at all;
•availability, transportation and pricing of raw materials, energy and transportation, including the impact of 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 conflicts between Russia and Ukraine and between the United States and Iran and elsewhere in the Middle East, the potential escalation of tensions between China and Taiwan, and recent events in Venezuela), and the Company's ability to continue to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;
•costs of labor and employment, including costs relating to employee benefits and any labor disputes;
•success of new product development, introduction and sales, including successful timing of new product or product innovation introductions and success of implementation of new manufacturing technologies, installation of manufacturing equipment, the startup of new facilities and lines, and integration of artificial intelligence ("AI") to drive productivity and efficiency;
•consumer demand for products and changing consumer preferences, including changes related to inflation, tariffs, and other macroeconomic factors, and changes in consumer attitudes toward plastic packaging;
•ability to be the low-cost global leader in customer-preferred packaging solutions within targeted segments;
•competitive pressures, including new product development, and technological market leadership, reputation for quality, industry overcapacity, customer and supplier consolidation, and changes in competitors' pricing for products;
•financial conditions of customers and suppliers;
•ability to maintain or increase productivity levels, contain or reduce costs, and maintain positive price/cost relationships. including through ongoing organizational efforts;
•ability to negotiate or retain contracts with customers, including in segments with concentration of sales volume;
•inventory management strategies of customers;
•collection of receivables from customers;
•ability to maintain or improve margins and leverage, cash flows and financial position;
•ability to attract and retain talented and qualified employees, managers, and executives;
•ability to profitably maintain and grow existing domestic and international business and market share;
•availability of credit to us, our customers and suppliers in needed amounts and on reasonable terms;
•effects of our indebtedness on our cash flow and business activities;
•fluctuations in interest rates and our borrowing costs;
•fluctuations in obligations and earnings of pension and postretirement benefit plans, including the timing of funding plan obligations, and the accuracy of assumptions of underlying projections of benefit plan obligations and payments, valuation of plan assets, and projections of long-term rates of return;
•foreign currency exchange rate fluctuations, interest rate and commodity price risk and the effectiveness of related hedges;
•resolution of income tax contingencies;
•changes in U.S. and foreign tariffs, tax rates, tax laws, regulations, judicial decisions and interpretations thereof, including income, sales and use, property, value added, employment, and other taxes;
•accuracy in valuation of deferred tax assets;
•the adoption of new, or changes in, accounting standards or interpretations;
•accuracy of assumptions underlying projections related to goodwill impairment testing, and accuracy of management's assessment of goodwill impairment;
SONOCO PRODUCTS COMPANY
•accuracy of assumptions underlying fair value measurements, accuracy of management's assessments of fair value and fluctuations in fair value;
•ability to maintain effective disclosure controls and internal controls, including with regard to financial reporting, to prevent or detect errors or acts of fraud;
•liability for and anticipated costs of resolution of litigation, regulatory actions or other legal proceedings or environmental remediation actions;
•effects of changing climate and greenhouse gas effects and environmental laws and regulations, including with respect to climate change and emissions reporting;
•operational disruptions at our major facilities;
•failure or disruptions in our information technology ("IT") systems;
•loss of consumer or investor confidence, including as a result of public concerns about products packaged in our containers, or chemicals or substances used in raw materials or in the manufacturing process;
•ability to protect our intellectual property rights;
•ability to meet environmental, sustainability and other similar goals;
•actions of domestic or foreign government agencies, the impact of new and evolving laws, regulations, rules and standards affecting the Company, including laws and regulations relating to packaging for food products and foods packaged therein, and increased costs of compliance;
•international, national, and local economic and market conditions and levels of unemployment;
•economic disruptions resulting from changing tariff policies and trade wars, the overall uncertainty surrounding international trade relations, war and other geopolitical tensions (such as the ongoing conflicts between Russia and Ukraine and between the United States and Iran and elsewhere in the Middle East, the potential escalation of tensions between China and Taiwan, and recent events in Venezuela), public health events, terrorist activities, and natural disasters, and our ability to successfully mitigate any negative impacts of such disruptions; and
•inflation and the activities and operations in highly inflationary economies.
More information about the risks, uncertainties, and assumptions that may cause actual results to differ materially from those expressed or forecasted in forward-looking statements is provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 under Item 1A - "Risk Factors" and throughout other sections of that report and in other reports filed with the Securities and Exchange Commission ("SEC"). In light of these various risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.
The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. You are, however, advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties and assumptions, in our future filings with the SEC on Forms 10-K, 10-Q, and 8-K.
SONOCO PRODUCTS COMPANY
COMPANY OVERVIEW
Sonoco is a multi-billion dollar global designer, developer, and manufacturer of a variety of highly engineered and sustainable packaging products serving multiple end markets. The Company has approximately 265 locations in 37 countries, serving some of the world's best-known brands around the globe.
Sonoco competes in multiple product categories, with the majority of the Company's revenues attributable to products and services sold to consumer and industrial products companies for use in the packaging of their products for sale or shipment. The Company also manufactures uncoated recycled paperboard for both internal use and open market sale. Each of the Company's operating units has its own sales staff and maintains direct sales relationships with its customers.
Late last year, Sonoco completed its multi-year portfolio transformation strategy, which was designed to create a more focused and simplified operating structure enabling sustainable earnings growth, accelerated margin expansion, and efficient capital allocation. Management believes that this streamlined structure positions the Company for more consistent execution of these strategic priorities.
Highlights of Sonoco's portfolio transformation strategy in recent years included the following significant acquisition and divestiture activity:
•The acquisition of Eviosys, Europe's leading food cans, ends and closures manufacturer, for net cash consideration of approximately $3.8 billion on December 4, 2024. This transaction, the largest in the Company's history, expanded Sonoco's global leadership in metal food can and aerosol packaging, facilitating our ability to partner with global customers to advance innovation and sustainability in metal packaging offerings.
•The sale of TFP on April 1, 2025 for net cash consideration of approximately $1.8 billion.
•The sale of ThermoSafe on November 3, 2025 for net cash consideration of approximately $0.7 billion.
The Company's operating and reporting structure consists of two reportable segments: Consumer Packaging and Industrial Paper Packaging. Following the sale of ThermoSafe, part of the All Other group of businesses, the Company's industrial and specialty plastics business ("Industrial Plastics") was the only remaining business in the All Other category. Effective January 1, 2026, the Company changed its operating and management reporting structure and, as a result, realigned Industrial Plastics to be reported within the Industrial Paper Packaging segment. Following this realignment, the All Other category as presented in this Quarterly Report on Form 10-Q reflects only the prior year results related to ThermoSafe. All prior year results for the Industrial Paper Packaging segment and the All Other group of businesses have been recast to conform to the new presentation.
In addition, beginning in 2026 the Company consolidated its global metal packaging and rigid paper containers businesses under one structure based on two geographies - Consumer Packaging, Americas and Consumer Packaging, Europe, Middle East and Africa ("EMEA") and Asia-Pacific ("APAC"). The Company believes the new geographically integrated structure creates a simpler and more efficient operating model that will lead to further innovation, collaboration and growth opportunities.
Sonoco continues to work on commercial, operational, and supply chain excellence programs to shift the mix of its business towards higher-valued products and increase overall productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, as well as strategic pricing initiatives intended to better capture input costs and the value of the services provided. The Company also remains focused on improving its competitive position by reducing its cost structure through targeted restructuring activities for operations and support functions intended to enable the Company's businesses to better leverage market capabilities and generate cash flow.
In March 2026, the Company opened a new paper can production facility in Nong Yai, Thailand, to serve the growing stacked chip market in Asia in its Consumer Packaging segment. This new facility represents a strategic investment that is expected to support growing demand across Asia while advancing the Company's innovation in sustainable packaging and utilizing advanced production systems designed for efficiency, speed and consistency.
The Company is investing $20.0 million in its Industrial Paper Packaging segment to add new nailed wood and steel reel production capacities at the Company's Hartselle, Alabama, facilities to help meet growing wire and cable infrastructure demand to support AI data centers and other electrical grid investments. This expansion is expected to be completed before the end of 2026.
SONOCO PRODUCTS COMPANY
The Company remains focused on sustainability excellence and reducing its global carbon emissions. In February 2026, the Company announced that a Virtual Power Purchase Agreement developed between Sonoco and ENGIE North America, consisting of 60 wind turbines in Crockett County, Texas, had become operational.
Sonoco's mission is to be the global leader in value-added, sustainable metal and fiber consumer and industrial packaging. In pursuit of this mission, Sonoco's continued priorities in 2026 and beyond will be to invest in high-return growth and margin expansion projects, to maintain a strong balance sheet by focusing on further debt reduction, and to continue to return capital to shareholders.
The Company believes that its simplified structure will enable greater strategic and operational focus, help generate proceeds to fund deleveraging and further focus capital investments in the Company's Consumer Packaging and Industrial Paper Packaging businesses, and deliver on its strategic priorities by driving sustainable growth, further expanding margins and efficiently allocating capital, maintaining a strong balance sheet and returning capital to shareholders. By transforming into a simpler, stronger and more sustainable company, the Company believes it is positioned to grow through the remainder of 2026 and beyond.
Global Trade Developments
Ongoing developments in U.S. and foreign trade policy have increased uncertainty for the global economy and the Company's business. On March 4, 2025, the U.S. government imposed a 25% tariff on all imports from Canada or Mexico. After imposing this tariff, the U.S. government allowed for the temporary exemption from the tariff for any goods that comply with the United States-Mexico-Canada Agreement ("USMCA"), which has helped mitigate the impact of the tariff on the Company's operations in North America. On February 10, 2025, the United States announced the expansion of Section 232 Tariffs on steel and aluminum imported into the United States, effective March 12, 2025, and the termination of the granting of new exclusions to mitigate these tariffs. As a result, imported steel and aluminum originating from most countries is currently subject to a 50% duty.
The U.S. government also imposed reciprocal tariffs at a baseline rate of 10%, effective April 5, 2025, and later set firmly established tariff rates for various countries at the beginning of August 2025. For the most part, these reciprocal tariffs were incremental increases over the previously established 10% temporary reciprocal tariffs. On February 20, 2026, the U.S. Supreme Court invalidated certain of these tariffs. On April 20, 2026, U.S. Customs and Border Protection launched an electronic system to manage refunds for tariffs paid under the International Emergency Economic Powers Act ("IEEPA"). The Company has applied for refunds of all eligible IEEPA tariffs and has recovered approximately 80% of its overall claim as of the end of the second quarter of 2026. The amount of the recoveries to date has not been material nor are any future recoveries expected to be material.
Effective April 6, 2026, the United States overhauled Section 232 tariffs on steel and aluminum moving from a metal-content-based assessment to the full customs value of the imported goods. Under the revised rules, many steel and aluminum products, along with their derivative articles, now face significantly higher tariffs. The metal ends that the Company imports into the United States are now subject to a 25% tariff. Future changes in tariff and trade policy may result in additional changes, the exact scope of which is not known at this time. While the full impact of the most recent Section 232 changes is uncertain, the Company does not currently expect the current tariff environment to have a material direct effect on its profitability or cash flows over the remainder of 2026 because the Company's manufacturing network is designed to serve local markets, reducing its exposure to cross-border disruptions and tariff-related risks. While the Company is actively working with its customers to help manage the impacts of higher input costs driven by tariffs, its business model allows for pricing adjustments when necessary. In addition, the Company believes its transformed portfolio following the Eviosys acquisition and the divestitures of its TFP and ThermoSafe businesses is significantly more resilient, with nearly two-thirds of the Company's sales in 2025 and the first half of 2026 coming from the Consumer Packaging segment, a segment that has historically demonstrated strong performance across economic cycles. In addition, while the Section 232 Tariffs impact input costs for the Company's U.S.-based operations with Consumer Packaging, Americas, which source a portion of their steel and aluminum purchases from outside the United States, the Company intends, and has the contractual ability, to continue to pass such increases in cost due to tariffs to its customers.
The ultimate resolution and consequences of these trade policy developments, and their effect on the Company, is uncertain and the Company will continue to monitor trade policy changes closely in order to adapt its strategies and to maintain competitiveness in a challenging market environment. See "Risk Factors" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
SONOCO PRODUCTS COMPANY
Other Recent Developments
The ongoing conflict between the United States and Iran has introduced additional volatility into global energy markets, shipping corridors, and raw material supply chains. The Company relies on a diversified global supplier base for resin, chemicals, adhesives, and other inputs, some of which are indirectly influenced by crude-oil-linked pricing or international transportation costs. As a result of this geopolitical and macroeconomic uncertainty, the Company expects inflation related to input costs, energy, and logistics to persist over the second half of 2026; however, it does not expect these cost pressures to materially impact the Company's ability to source materials, operate facilities, or meet customer demand. The Company does not expect these factors to materially impact its near-term financial performance based on cost recovery actions through recognized market price increases and contractual price resets. However, the duration and broader economic consequences of the conflict, including the potential for further increases in energy and logistics costs, remain uncertain. The Company will continue to evaluate developments in the geopolitical environment and adjust its risk management strategies as appropriate.
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA"), which includes a broad range of tax reform provisions and extends or modifies certain provisions of prior tax legislation, was signed into law in the United States. The Company evaluated the effects of the OBBBA in accordance with ASC 740 and determined that enactment of the legislation did not result in a material adjustment to its income tax accounts upon enactment. Based on the Company's assessment, the OBBBA is not expected to have a material impact on the Company's consolidated effective tax rate, results of operations, financial position or cash flows for 2026. While certain provisions of the OBBBA are expected to provide future tax benefits, largely through acceleration of deductions to benefit cash taxes, the overall impact is not currently expected to be material. The Company will continue to monitor the implementation of the OBBBA and related regulatory, administrative and interpretive guidance and will evaluate the effects of any such guidance as it becomes available.
RESULTS OF OPERATIONS
The Company's financial statements are prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). Sonoco's management considers a variety of both GAAP and non-GAAP financial and operating measures in assessing the Company's financial performance. The key GAAP measures used are net sales, operating profit, gross profit margin, net income attributable to Sonoco, diluted earnings per share ("EPS"), segment operating profit, and segment operating profit margin. The key non-GAAP measures used are Adjusted operating profit, Adjusted net income attributable to Sonoco, Adjusted diluted EPS, Adjusted EBITDA, Segment Adjusted EBITDA and Segment Adjusted EBITDA margin. For information about the Company's use of non-GAAP measures and reconciliations of these measures to the most directly comparable GAAP measures see "Non-GAAP Financial Measures" below.
Management may also assess year-over-year changes in operating performance in terms of productivity savings or usage, which is driven by procurement savings or losses, production efficiencies or inefficiencies and the effect of fixed cost reduction initiatives. Management views productivity as a measure of operational excellence of the business and uses it to evaluate improvements in manufacturing efficiency, including automation, and other fixed and variable cost reduction initiatives. Management provides investors with this information to evaluate Sonoco's operating results in a manner similar to how management evaluates operating performance. The Company calculates productivity savings as the
difference between applicable current period costs and prior year costs, excluding the impact of estimated inflation or deflation, and volume changes where appropriate.
On December 18, 2024, the Company announced that it had entered into an agreement to sell TFP. This sale was completed on April 1, 2025. In accordance with applicable accounting guidance, the results of TFP are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for all periods prior to the completion of the sale presented in this Quarterly Report on Form 10-Q. The Condensed Consolidated Statements of Comprehensive Income, Changes in Total Equity, and Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. All amounts, percentages and disclosures for all periods presented in this Quarterly Report on Form 10-Q reflect only the continuing operations of Sonoco unless otherwise noted.
Amounts reported in thousands within this Quarterly Report on Form 10-Q are computed based on the actual amounts. As a result, the sum of the components may not equal the total amount reported in thousands due to rounding. In addition, certain columns and rows within tables may not sum to the totals due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.
SONOCO PRODUCTS COMPANY
Second Quarter 2026 Compared with Second Quarter 2025
The following discussion provides a review of results for the three-month period ended June 28, 2026 versus the three-month period ended June 29, 2025.
Overview
Consolidated net sales for the second quarter of 2026 were $1.9 billion, a $(25.0) million or (1.3)% decline from the second quarter of 2025. The November 2025 divestiture of ThermoSafe reduced sales by $(65.7) million in the second quarter of 2026 compared to the same period last year while lower volumes further reduced sales by $(22.9) million as continuing macroeconomic and geopolitical pressures weighed on both the Company's supply chain and its customers. These decreases were partially offset by a $37.0 million benefit from higher selling prices implemented to offset the effects of inflation and tariffs and the favorable impact from foreign currency translation of $29.3 million. All other factors contributed to a net reduction of $(2.7) million in the second quarter of 2026 compared to the same period last year.
GAAP operating profit for the second quarter of 2026 was $192.8 million, an increase of 9.8% from the $175.7 million reported in the second quarter of 2025. The increase in GAAP operating profit was primarily due to productivity savings from fixed cost reduction initiatives and procurement savings of $18.7 million, lower acquisition, integration and divestiture-related costs of $9.1 million, lower restructuring costs of $7.8 million, higher gains on the sale of businesses of $4.7 million, and the net favorable impact of foreign currency translation and other items totaling $5.1 million. These favorable impacts were partially offset by unfavorable price/cost of $(11.8) million, the impact of the ThermoSafe divestiture of $(8.9) million, and unfavorable volume/mix of $(7.6) million. Adjusted Operating Profit for the second quarter of 2026 was $242.4 million, a decrease of (1.8)% from the $246.9 million reported for the same period in 2025, primarily resulting from the impact of the ThermoSafe divestiture.
GAAP net income attributable to Sonoco for the second quarter of 2026 decreased to $104.9 million, or $1.05 per diluted share, compared to $493.4 million, or $4.96 per diluted share, for the second quarter of 2025. The quarter-over-quarter reduction was primarily due to net income from discontinued operations in the prior year of $424.5 million related to the April 2025 divestiture of TFP. The impact of this reduction was partially offset by the increase in GAAP operating profit as described above and lower net interest expense, as described more fully below. Adjusted net income attributable to Sonoco and Adjusted diluted EPS for the second quarter of 2026 were $150.5 million (or $1.51 per diluted share), compared with $136.1 million (or $1.37 per diluted share) for the same period in 2025.
Costs and Expenses
Cost of sales decreased by $(11.1) million, or (0.7)%, in the second quarter of 2026 compared with the second quarter of 2025. This decrease resulted from a $(49.0) million impact from the divestiture of ThermoSafe and lower labor costs of $(18.4) million, partially offset by higher direct material costs of $36.9 million and higher outbound freight costs of $20.5 million. Other favorable factors resulted in a net reduction in cost of sales totaling $(1.1) million. Gross profit margins decreased slightly to 20.8% in the second quarter of 2026 from 21.3% in the second quarter of 2025.
Selling, general and administrative costs decreased by $(18.5) million, or (8.5)%, and were 10.6% of sales in the second quarter of 2026, compared to 11.5% of sales in the second quarter of 2025. This decrease reflects lower acquisition, integration, and divestiture-related costs of $(9.1) million, reduced costs from the ThermoSafe divestiture of $(7.8) million, and other net decreases, primarily salaries and benefits, totaling $(1.6) million.
Restructuring/Asset impairment charges totaled $1.9 million in the second quarter of 2026, compared with $9.8 million during the same period last year. The net charges in the current year related primarily to ongoing costs related to prior year plant closures and headcount eliminations in conjunction with the Company's ongoing organizational effectiveness efforts, partially offset by reductions resulting from revisions to the estimates of total severance to be paid. Additional information regarding restructuring and asset impairment charges is provided in Note 6 to the Company's Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Gain/(Loss) on divestiture of business in the second quarter of 2026 and 2025 was a gain of $2.6 million from the sale of the Company's recycling operations in Savannah, Georgia, and a loss of $(2.1) million from the sale of the Company's recycling operations in Asheville, North Carolina, respectively. These operations were part of the Industrial Paper Packaging segment. See Note 4 to the Company's Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
SONOCO PRODUCTS COMPANY
Other expense, net was $6.2 million and $6.6 million in the second quarter of 2026 and 2025, respectively. The amounts in both years are comprised of charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within our Consumer Packaging segment.
Non-operating pension costs decreased by $(0.1) million during the second quarter of 2026 versus the same period last year. The decrease is primarily due to higher expected return on plan assets and lower interest charges, partially offset by higher settlement and curtailment charges. Additional information regarding costs of the Company's retirement plans is provided in Note 13 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Net interest expense for the second quarter of 2026 decreased to $41.4 million, compared with $60.2 million during the second quarter of 2025, primarily due to lower average debt levels resulting from the Company's repayment of debt during 2025 utilizing proceeds from the divestitures of TFP and ThermoSafe.
The effective tax rates on GAAP income from continuing operations before income taxes and Adjusted income from continuing operations before income taxes in the second quarter of 2026 were 27.8% and 23.8%, respectively, compared with 37.3% and 25.6%, respectively, in the corresponding prior year quarter. The decrease in the GAAP effective tax rate was primarily due to the absence of non-GAAP adjustments for restructuring and other discrete one-time items which were present in 2025.
Discontinued Operations
Net income from discontinued operations totaled $424.5 million in the second quarter of 2025, reflecting the net after-tax gain on divestiture of business recognized upon completion of the sale of TFP on April 1, 2025.
Reportable Segments
The Company's operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. During 2025, the All Other group of businesses consisted of ThermoSafe and Industrial Plastics. With the divestiture of ThermoSafe in November 2025, only Industrial Plastics remained. Effective January 1, 2026, the Company changed its operating and management reporting structure to include the results of Industrial Plastics in the Company's Industrial Paper Packaging segment and discontinued the use of All Other. Results for prior periods have been revised to conform with the current presentation.
The following table summarizes net sales attributable to each of the Company's segments for the second quarters of 2026 and 2025 and the All Other group of businesses for the second quarter of 2025:
| Three Months Ended | ||||||||||||||||||||
| (Dollars in thousands) | June 28, 2026 | June 29, 2025 |
% Change | |||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Consumer Packaging | $ | 1,241,839 | $ | 1,227,033 | 1.2 | % | ||||||||||||||
| Industrial Paper Packaging | 643,646 | 617,661 | 4.2 | % | ||||||||||||||||
| Total reportable segments | 1,885,485 | 1,844,694 | 2.2 | % | ||||||||||||||||
| All Other | - | 65,747 | (100.0) | % | ||||||||||||||||
| Net sales | $ | 1,885,485 | $ | 1,910,441 | (1.3) | % | ||||||||||||||
SONOCO PRODUCTS COMPANY
The following table summarizes operating profit attributable to each of the Company's reportable segments, and Corporate-related activity for the second quarters of 2026 and 2025 and the All Other group of businesses for the second quarter of 2025:
| Three Months Ended | ||||||||||||||||||||
| (Dollars in thousands) | June 28, 2026 | June 29, 2025 |
% Change | |||||||||||||||||
| Operating profit: | ||||||||||||||||||||
| Consumer Packaging | $ | 151,705 | $ | 160,353 | (5.4) | % | ||||||||||||||
| Industrial Paper Packaging | 89,379 | 85,934 | 4.0 | % | ||||||||||||||||
| Segment operating profit | 241,084 | 246,287 | (2.1) | % | ||||||||||||||||
| All Other | - | 8,406 | (100.0) | % | ||||||||||||||||
| Corporate | ||||||||||||||||||||
| Restructuring/Asset impairment charges, net | (1,933) | (9,752) | ||||||||||||||||||
| Amortization of acquisition intangibles | (45,570) | (44,193) | ||||||||||||||||||
| Gain/(Loss) on divestiture of business | 2,640 | (2,083) | ||||||||||||||||||
| Acquisition, integration and divestiture-related costs | (2,083) | (11,161) | ||||||||||||||||||
| Other operating charges, net | (1,301) | (11,837) | ||||||||||||||||||
| Operating profit | $ | 192,837 | $ | 175,667 | 9.8 | % | ||||||||||||||
Consumer Packaging
The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper, steel and plastic containers; and metal and peelable membrane ends, closures, and components. These products primarily serve the consumer staples market, focused on food, beverage, household, personal, and pharmaceutical products.
Segment net sales increased $14.8 million, or 1.2%, over the prior year quarter as the favorable impact of foreign exchange rates added $20.3 million and price increases implemented to recover inflation and tariff-related costs added approximately $18.9 million of sales. These favorable factors were partially offset by softer volume/mix across the segment of $(22.1) million as higher paper can volumes in EMEA/APAC due to rising snack demand were more than offset by lower demand for metal aerosol cans and sealant tubes. Other unfavorable factors reduced quarter-over-quarter sales by $(2.3) million.
Segment operating profit decreased (5.4)% compared to the corresponding quarter last year, though continued productivity and disciplined cost management helped mitigate the impact of softer volumes. Segment operating profit margin was 12.2% and 13.1% in the second quarter of 2026 and 2025, respectively.
Industrial Paper Packaging
The primary products produced and sold within the Industrial Paper Packaging segment include goods produced from recycled fiber, including paperboard tubes, cones, and cores; paper-based protective packaging; and uncoated recycled paperboard for folding cartons, can board and laminated structures. Products across this segment support end markets, primarily in paper, textile, and films.
Segment net sales increased $26.0 million, or 4.2%, from the corresponding prior year quarter as price gains resulting from index-based pricing resets added $18.1 million of sales and the favorable impact of foreign exchange rates added $8.8 million, while the segment's volume/mix was flat. All other factors contributed to a net reduction in sales of $(0.9) million in the second quarter of 2026 compared with the same period last year.
Segment operating profit increased 4.0% compared to the corresponding quarter last year primarily due to the impact of productivity savings from fixed cost reduction initiatives and procurement savings, and favorable mill utilization in North America. These favorable factors were partially offset by unfavorable price/cost from rising material, freight and other operating costs. Segment operating profit margin was 13.9% in both the second quarter of 2026 and 2025.
All Other
Net sales and operating profit reported for All Other in 2025 relate to the Company's ThermoSafe business, which was sold in November 2025.
SONOCO PRODUCTS COMPANY
Six Months Ended June 28, 2026 Compared with Six Months Ended June 29, 2025
The following discussion provides a review of results for the six-month period ended June 28, 2026 compared with the six-month period ended June 29, 2025.
Overview
Consolidated net sales for the first six months of 2026 were $3.6 billion, a $(57.7) million or (1.6)% decline from the same period last year. The November 2025 divestiture of ThermoSafe reduced year-over-year sales by $(120.9) million in the first six months of 2026 compared to the same period last year while lower volumes further reduced year-over-year sales by $(120.8) million as macroeconomic and geopolitical pressures weighed on both the Company's supply chain and its customers. These decreases were partially offset by a $75.8 million benefit from higher selling prices implemented to offset the effects of inflation and tariffs and the favorable impact from foreign currency translation of $116.4 million. All other factors contributed to a net reduction of $(8.2) million in the first six months of 2026 compared to the same period last year.
GAAP operating profit for the first six months of 2026 was $319.9 million, an increase of 5.8% from the $302.5 million reported for the first six months of 2025. The increase in GAAP operating profit was primarily due to productivity savings from fixed cost reduction initiatives and procurement savings of $24.2 million, lower acquisition, integration and divestiture-related costs of $30.0 million, the favorable impact of foreign currency translation of $15.3 million, higher gains on the sale of businesses of $7.0 million, and lower restructuring costs of $6.3 million. These favorable impacts were partially offset by unfavorable volume/mix of $(50.7) million, the impact of the ThermoSafe divestiture of $(16.1) million, and unfavorable price/cost of $(4.8) million. All other items comprised a net favorable year-over-year impact of $6.2 million. Adjusted operating profit for the first six months of 2026 was $443.2 million, a decrease of (3.6)% from the $459.7 million reported for the same period in 2025.
GAAP net income attributable to Sonoco for the first six months of 2026 decreased to $172.5 million, or $1.73 per diluted share, compared to $547.9 million, or $5.51 per diluted share, reported for the same period of 2025. The year-over-year reduction was primarily due to net income from discontinued operations in the prior year of $429.7 million related to the April 2025 divestiture of TFP. The impact of this reduction was partially offset by the increase in GAAP operating profit as described above, lower interest expense, and the impact of a lower GAAP effective tax rate in the current year. Adjusted net income attributable to Sonoco and Adjusted diluted EPS for the six-month period ended June 28, 2026 decreased (1.1)% to $269.9 million, or $2.71 per diluted share, from $273.0 million, or $2.74 per diluted share, in the six-month period ended June 29, 2025.
Costs and Expenses
Cost of sales decreased by $(35.8) million, or (1.3)%, in the first six months of 2026 compared with the first six months of 2025. This year-over-year decrease resulted from a $(89.3) million impact from the divestiture of ThermoSafe, lower labor costs of $(37.3) million, and the non-recurrence of inventory step-up amortization totaling $(18.0) million related to the Company's December 2024 acquisition of Eviosys. Partially offsetting these decreases were higher year-over-year direct material and outbound freight costs of $81.0 million and $27.5 million, respectively. Other factors resulted in a net increase in cost of sales totaling $0.3 million. Gross profit margins were 20.7% for the first six months of 2026 and 21.0% for the first six months of 2025.
Selling, general and administrative costs for the first six months of 2026 decreased $(26.1) million, or (6.1)%, year over year. This decrease reflects lower acquisition, integration, and divestiture-related costs of $(12.0) million, reduced costs from the ThermoSafe divestiture of $(15.4) million, and other net increases, primarily salaries and benefits, totaling $1.3 million.
Restructuring/Asset impairment charges totaled $17.1 million during the first six months of 2026, compared with $23.3 million during the same period last year. Restructuring charges in the first six months of 2025 included higher costs related to the closures of cone facilities in Taiwan and Mexico and a metal packaging facility in Spain. The net charges in the current year related primarily to ongoing costs related to these and other prior-year plant closures and headcount eliminations in conjunction with the Company's ongoing organizational effectiveness efforts, partially offset by reductions resulting from revisions to the estimates of total severance to be paid. Additional information regarding restructuring and asset impairment charges is provided in Note 6 to the Company's Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
SONOCO PRODUCTS COMPANY
Gain/(Loss) on divestiture of business during the first six months of 2026 was a net gain of $0.8 million reflecting a $2.6 million gain from the sale of the Company's recycling operations in Savannah, Georgia, part of the Industrial Packaging segment, partially offset by a $(1.9) million charge related to the final working capital settlement for the ThermoSafe divestiture. Gain/(Loss) on divestiture of business during the first six months of 2025 was a net loss of $(6.3) million reflecting losses from the sales of the Company's tube and core operations in Venezuela and recycling operations in Asheville, North Carolina, of $(5.4) million and $(2.1) million, respectively, partially offset by a gain of $1.2 million from the sale of a small construction tube operation in France, all part of the Industrial Paper Packaging segment. See Note 4 to the Company's Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Other expense, net during the first six months of 2026 and 2025 was $18.5 million and $13.1 million, respectively. The amounts in both years are comprised of charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within our Consumer Packaging segment. Other expense, net in the first six months of 2026 also includes $6.6 million of non-operating charges related to certain pre-acquisition liabilities related to the Sonoco Metal Packaging ("SMP") EMEA business.
Non-operating pension costs decreased by $(0.7) million during the first six months year over year. The decrease is primarily due to higher expected return on plan assets, lower interest and amortization charges, partially offset by higher settlement and curtailment charges during the first six months of 2026. Additional information regarding costs of the Company's retirement plans is provided in Note 13 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
GAAP net interest expense during the first six months of 2026 decreased to $77.3 million, compared with $108.9 million during the first six months of 2025. The decrease of $(31.7) million was primarily due to lower average debt levels resulting from the Company's repayment of debt during 2025 utilizing proceeds from the divestitures of TFP and ThermoSafe.
The effective tax rates on GAAP income from continuing operations before income taxes and Adjusted income from continuing operations before income taxes in the first six months of 2026 were 22.4% and 24.6%, respectively, compared with 34.8% and 25.7%, respectively, in the prior-year period. The decrease in the GAAP effective tax rate was primarily due to the recording of a provision-to-return adjustment for a retroactive U.S. tax election in the first quarter of 2026, as well as the absence of discrete one-time items which were present in 2025.
Discontinued Operations
Net income from discontinued operations totaled $429.7 million in the first six months of 2025, reflecting the net after-tax gain on divestiture of business of $424.5 million recognized upon completion of the sale of TFP on April 1, 2025 and $5.2 million of net income earned by the operation in the period prior to the sale.
SONOCO PRODUCTS COMPANY
Reportable Segments
The following table summarizes net sales attributable to each of the Company's reportable segments, and the All Other group of businesses during the first six months of 2026 and 2025:
| Six Months Ended | ||||||||||||||||||||
| (Dollars in thousands) | June 28, 2026 | June 29, 2025 | % Change | |||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Consumer Packaging | $ | 2,338,914 | $ | 2,293,626 | 2.0 | % | ||||||||||||||
| Industrial Paper Packaging | 1,223,013 | 1,205,193 | 1.5 | % | ||||||||||||||||
| Total reportable segments | 3,561,927 | 3,498,819 | 1.8 | % | ||||||||||||||||
| All Other | - | 120,850 | (100.0) | % | ||||||||||||||||
| Net sales | $ | 3,561,927 | $ | 3,619,669 | (1.6) | % | ||||||||||||||
The following table summarizes operating profit attributable to each of the Company's reportable segments, the All Other group of businesses, and Corporate-related activity during the first six months of 2026 and 2025:
| Six Months Ended | ||||||||||||||||||||
| (Dollars in thousands) | June 28, 2026 | June 29, 2025 | % Change | |||||||||||||||||
| Operating profit: | ||||||||||||||||||||
| Consumer Packaging | $ | 277,354 | $ | 301,124 | (7.9) | % | ||||||||||||||
| Industrial Paper Packaging | 158,625 | 162,265 | (2.2) | % | ||||||||||||||||
| Segment operating profit | 435,979 | 463,389 | (5.9) | % | ||||||||||||||||
| All Other | - | 15,125 | (100.0) | % | ||||||||||||||||
| Corporate | ||||||||||||||||||||
| Restructuring/Asset impairment charges, net | (17,066) | (23,333) | ||||||||||||||||||
| Amortization of acquisition intangibles | (89,890) | (86,154) | ||||||||||||||||||
| Gain/(Loss) on divestiture of business | 775 | (6,266) | ||||||||||||||||||
| Acquisition, integration and divestiture-related costs | (8,421) | (38,427) | ||||||||||||||||||
| Other operating charges, net | (1,448) | (21,807) | ||||||||||||||||||
| Operating profit | $ | 319,929 | $ | 302,527 | 5.8 | % | ||||||||||||||
Consumer Packaging
Segment net sales increased $45.3 million, or 2.0%, year to date compared to the prior-year period as the favorable impact of foreign exchange rates added $88.0 million and price increases implemented to offset the effects of inflation and tariffs added approximately $46.5 million of year-over-year sales. These favorable factors were partially offset by lower volume/mix across the segment of $(83.7) million as higher paper can volumes in EMEA/APAC due to rising snack demand were more than offset by lower demand for metal aerosol cans and sealant tubes. Other unfavorable factors reduced year-over-year sales by $(5.5) million.
Year-to-date segment operating profit decreased $(23.8) million, or (7.9)%, as productivity, cost containment savings, and the favorable impact of foreign exchange rates were offset by softer volumes. As a result, segment operating profit margin decreased to 11.9% in the first six months of 2026 from 13.1% in the same period last year.
Industrial Paper Packaging
Segment net sales increased 1.5% year to date compared to the prior-year period as higher selling prices resulting from index-based pricing resets added $29.3 million of year-over-year sales and the favorable impact of foreign exchange rates added $27.5 million. These favorable factors were partially offset by unfavorable volume/mix of $(37.1) million. All other factors contributed to a net reduction in sales of $(1.9) million in the first six months of 2026 compared with the same period last year.
SONOCO PRODUCTS COMPANY
Segment operating profit decreased (2.2)% versus the prior-year period primarily as a result of lower volume/mix and unfavorable price/cost, as well as losses in the first six months of 2026 attributable to fires at recycling facilities in Greenville and Spartanburg, South Carolina. These unfavorable factors were partially offset by productivity savings from fixed cost reduction initiatives and procurement savings and the favorable impact from foreign exchange rates. As a result, segment operating margin decreased to 13.0% in the first six months of 2026 from 13.5% in the same period last year.
All Other
Net sales and operating profit reported for All Other in 2025 relate to the Company's ThermoSafe business, which was sold in November 2025.
SONOCO PRODUCTS COMPANY
NON-GAAP FINANCIAL MEASURES
The Company uses certain financial performance measures, both internally and externally, that are not in conformity with GAAP (referred to as "non-GAAP financial measures") to assess and communicate the financial performance of the Company. These "non-GAAP" financial measures, which are identified using the term "Adjusted" (for example, "Adjusted Operating Profit," "Adjusted Net Income Attributable to Sonoco," and "Adjusted Diluted EPS"), reflect adjustments to the Company's GAAP operating results to exclude amounts, including the associated tax effects, where applicable, relating to:
•restructuring/asset impairment charges1;
•acquisition, integration and divestiture-related costs;
•gains or losses from the divestiture of businesses;
•losses from the early extinguishment of debt;
•non-operating pension costs;
•amortization expense on acquisition intangibles;
•changes in last-in, first-out ("LIFO") inventory reserves;
•certain income tax events and adjustments;
•derivative gains/losses;
•other non-operating income and losses; and
•certain other items, if any.
1 Restructuring and restructuring-related asset impairment charges are a recurring item as the Company's restructuring programs usually require several years to fully implement, and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity, the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.
The Company's management believes the exclusion of the amounts related to the above-listed items improves the period-to-period comparability and analysis of the underlying financial performance of the business. More information about the Company's use of non-GAAP financial measures is provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, under Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations," under the heading "Non-GAAP Financial Measures."
In addition to the "Adjusted" results described above, the Company also uses Adjusted EBITDA, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin. Adjusted EBITDA is defined as net income excluding the following: interest expense; interest income; provision for income taxes; depreciation and amortization expense; non-operating pension costs; net income/loss attributable to noncontrolling interests; restructuring/asset impairment charges; changes in LIFO inventory reserves; gains/losses from the divestiture of businesses; acquisition, integration and divestiture-related costs; other income; derivative gains/losses; and other non-GAAP adjustments, if any, that may arise from time to time. Segment Adjusted EBITDA is defined as segment operating profit plus depreciation and amortization expense and equity in earnings of affiliates, net of tax. Segment Adjusted EBITDA Margin is defined as Segment Adjusted EBITDA divided by segment net sales.
The Company's non-GAAP financial measures are not calculated in accordance with, nor are they an alternative for, measures conforming to GAAP, and they may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.
The Company presents these non-GAAP financial measures to provide investors with information to evaluate Sonoco's operating results in a manner similar to how management evaluates business performance. The Company consistently applies its non-GAAP financial measures presented herein and uses them for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of management and each business unit against plans/forecasts. In addition, these same non-GAAP financial measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.
SONOCO PRODUCTS COMPANY
Material limitations associated with the use of such measures include that they do not reflect all period costs included in operating expenses and may not be comparable with similarly named financial measures of other companies. Furthermore, the calculations of these non-GAAP financial measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.
To compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in evaluating the Company's results to review both GAAP information, which includes all of the items impacting financial results, and the related non-GAAP financial measures that exclude certain elements, as described above. Further, Sonoco management does not, nor does it suggest that investors should, consider any non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever reviewing a non-GAAP financial measure, investors are encouraged to review and consider the related reconciliation to understand how it differs from the most directly comparable GAAP measure.
Quarterly Reconciliations of GAAP to Non-GAAP Financial Measures
The following tables reconcile the Company's non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company's Condensed Consolidated Statements of Income for the three-month periods ended June 28, 2026 and June 29, 2025.
Adjusted Operating Profit, Adjusted Income from Continuing Operations Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS
| For the three-month period ended June 28, 2026 | |||||||||||||||||
| Dollars in thousands, except per share data | Operating Profit | Income from Continuing Operations Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | ||||||||||||
| As Reported (GAAP) | $ | 192,837 | $ | 142,312 | $ | 39,551 | $ | 104,894 | $ | 1.05 | |||||||
Acquisition, integration and divestiture-related costs1 | 2,083 | 2,083 | (199) | 2,282 | 0.02 | ||||||||||||
| Changes in LIFO inventory reserves | 1,154 | 1,154 | 285 | 869 | 0.01 | ||||||||||||
| Amortization of acquisition intangibles | 45,570 | 45,570 | 10,038 | 35,532 | 0.36 | ||||||||||||
| Restructuring/Asset impairment charges, net | 1,933 | 1,940 | 17 | 1,930 | 0.02 | ||||||||||||
Gain on divestiture of business2 | (2,640) | (2,640) | (650) | (1,990) | (0.02) | ||||||||||||
| Non-operating pension costs | - | 2,920 | 749 | 2,171 | 0.02 | ||||||||||||
| Net losses from derivatives | 254 | 254 | 63 | 191 | - | ||||||||||||
| Other adjustments | 1,231 | 1,231 | (3,417) | 4,648 | 0.05 | ||||||||||||
| Total adjustments | 49,585 | 52,512 | 6,886 | 45,633 | 0.46 | ||||||||||||
| Adjusted | $ | 242,422 | $ | 194,824 | $ | 46,437 | $ | 150,527 | $ | 1.51 | |||||||
| Due to rounding, individual items may not sum appropriately. | |||||||||||||||||
1 Acquisition, integration and divestiture-related costs relate primarily to the Company's December 2024 acquisition of Eviosys.
2 Gain on divestiture of business reflects the gain of $2,640 from the sale of a recycling facility in Savannah, Georgia.
SONOCO PRODUCTS COMPANY
| For the three-month period ended June 29, 2025 | |||||||||||||||||
| Dollars in thousands, except per share data | Operating Profit | Income from Continuing Operations Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | ||||||||||||
As Reported (GAAP)1 | $ | 175,667 | $ | 105,881 | $ | 39,500 | $ | 493,423 | $ | 4.96 | |||||||
Acquisition, integration and divestiture-related costs2 | 11,161 | 11,161 | 2,120 | 9,041 | 0.09 | ||||||||||||
| Changes in LIFO inventory reserves | 1,193 | 1,193 | 291 | 902 | 0.01 | ||||||||||||
| Amortization of acquisition intangibles | 44,193 | 44,193 | 9,401 | 34,792 | 0.35 | ||||||||||||
| Restructuring/Asset impairment charges, net | 9,752 | 9,752 | 2,197 | 7,173 | 0.07 | ||||||||||||
| Loss/(Gain) on divestiture of business | 2,083 | 2,083 | 514 | (422,979) | (4.25) | ||||||||||||
| Non-operating pension costs | - | 2,982 | 761 | 2,221 | 0.02 | ||||||||||||
| Net losses from derivatives | 2,154 | 2,154 | 548 | 1,606 | 0.02 | ||||||||||||
Other adjustments3 | 735 | 735 | (9,201) | 9,936 | 0.10 | ||||||||||||
| Total adjustments | 71,271 | 74,253 | 6,631 | (357,308) | (3.59) | ||||||||||||
| Adjusted | $ | 246,938 | $ | 180,134 | $ | 46,131 | $ | 136,115 | $ | 1.37 | |||||||
| Due to rounding, individual items may not sum appropriately. | |||||||||||||||||
1 Operating profit, income from continuing operations before income taxes, and provision for income taxes exclude results related to discontinued operations of $625,773, $625,773 and $201,225, respectively.
2 Acquisition, integration and divestiture-related costs relate mostly to the Company's December 2024 acquisition of Eviosys and the divestiture of TFP, which was completed on April 1, 2025.
3 Other adjustments include discrete tax items primarily related to tax rate changes on accumulated other comprehensive income ("AOCI") and rate differences between non-US jurisdictions related to acquisitions/divestitures.
Adjusted EBITDA1
| Three Months Ended | |||||||||||
| Dollars in thousands | June 28, 2026 | June 29, 2025 | |||||||||
| Net income attributable to Sonoco | $ | 104,894 | $ | 493,423 | |||||||
| Adjustments: | |||||||||||
| Interest expense | 45,478 | 64,367 | |||||||||
| Interest income | (4,064) | (4,122) | |||||||||
| Provision for income taxes | 39,551 | 240,725 | |||||||||
| Depreciation and amortization | 131,096 | 129,475 | |||||||||
| Non-operating pension costs | 2,920 | 2,982 | |||||||||
| Net income/(loss) attributable to noncontrolling interests | 130 | (224) | |||||||||
| Restructuring/Asset impairment charges, net | 1,933 | 9,752 | |||||||||
| Changes in LIFO inventory reserves | 1,154 | 1,193 | |||||||||
| Gain on divestiture of business | (2,640) | (623,690) | |||||||||
| Acquisition, integration and divestiture-related costs | 2,083 | 11,161 | |||||||||
| Net loss from derivatives | 254 | 2,154 | |||||||||
| Other non-GAAP adjustments | 1,231 | 735 | |||||||||
| Adjusted EBITDA | $ | 324,020 | $ | 327,931 | |||||||
1 For the three-month period ended June 29, 2025, Adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.
SONOCO PRODUCTS COMPANY
The Company does not calculate net income by segment; therefore, Adjusted EBITDA by segment is reconciled to the closest GAAP measure of segment profitability, segment operating profit. Segment operating profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with Accounting Standards Codification 280, "Segment Reporting," as prescribed by the Financial Accounting Standards Board.
Segment results, which are reviewed by the Company's management to evaluate segment performance, do not include the following: restructuring/asset impairment charges; amortization of acquisition intangibles; acquisition, integration and divestiture-related costs; changes in LIFO inventory reserves; gains/losses from the sale of businesses or other assets; gains/losses from derivatives; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business. Accordingly, the term "segment operating profit" is defined as the segment's portion of "operating profit" excluding those items. All remaining general corporate expenses have been allocated as operating costs to each of the Company's reportable segments, except for costs related to discontinued operations and All Other prior to 2026. Total operating profit is composed of the sum of segment and All Other operating profit plus certain items that have been allocated to Corporate, including amortization of acquisition intangibles; restructuring/asset impairment charges; changes in LIFO inventory reserves; acquisition, integration and divestiture-related costs; gains/losses from the sale of businesses or other assets; gains/losses on derivatives; and certain other items that were excluded from segment and All Other operating profit. As previously described, the use of All Other was discontinued effective January 1, 2026.
| Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation | ||||||||||||||
| For the Three Months Ended June 28, 2026 | ||||||||||||||
| Dollars in thousands | Consumer Packaging segment | Industrial Paper Packaging segment | Corporate | Total | ||||||||||
Segment and Total Operating Profit1 | $ | 151,705 | $ | 89,379 | $ | (48,247) | $ | 192,837 | ||||||
| Adjustments: | ||||||||||||||
Depreciation and amortization2 | 54,675 | 30,851 | 45,570 | 131,096 | ||||||||||
Other expense, net3 | - | - | (6,191) | (6,191) | ||||||||||
| Equity in earnings of affiliates, net of tax | 276 | 1,987 | - | 2,263 | ||||||||||
Restructuring/Asset impairment charges, net4 | - | - | 1,933 | 1,933 | ||||||||||
Changes in LIFO inventory reserves5 | - | - | 1,154 | 1,154 | ||||||||||
Acquisition, integration and divestiture-related costs6 | - | - | 2,083 | 2,083 | ||||||||||
Gain on divestiture of business7 | - | - | (2,640) | (2,640) | ||||||||||
Net loss from derivatives8 | - | - | 254 | 254 | ||||||||||
| Other non-GAAP adjustments | - | - | 1,231 | 1,231 | ||||||||||
| Segment Adjusted EBITDA | $ | 206,656 | $ | 122,217 | $ | (4,853) | $ | 324,020 | ||||||
| Net Sales | $ | 1,241,839 | $ | 643,646 | ||||||||||
| Segment Operating Profit Margin | 12.2 | % | 13.9 | % | ||||||||||
| Segment Adjusted EBITDA Margin | 16.6 | % | 19.0 | % | ||||||||||
1 As previously announced, effective January 1, 2026, results for Industrial Plastics, previously included in the All Other group of businesses, are included in the Industrial segment. The Company no longer reports the results of any of its businesses in All Other.
2 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $40,507 and the Industrial Paper Packaging segment of $5,063.
3 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.
4 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $(170) and the Industrial Paper Packaging segment of $1,237.
SONOCO PRODUCTS COMPANY
5 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $1,143 and the Industrial Paper Packaging segment of $11.
6 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $2,631 and the Industrial Paper Packaging segment of $152.
7 Included in Corporate is a gain of $2,640 from the sale of a recycling operation in Savannah, Georgia, part of the Industrial Paper Packaging segment.
8 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $12 and the Industrial Paper Packaging segment of $242.
Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation | |||||||||||||||||
| For the Three Months Ended June 29, 2025 | |||||||||||||||||
| Excludes results of discontinued operations | |||||||||||||||||
| Dollars in thousands | Consumer Packaging segment | Industrial Paper Packaging segment | All Other | Corporate | Total | ||||||||||||
| Segment and Total Operating Profit | $ | 160,353 | $ | 85,934 | $ | 8,406 | $ | (79,026) | $ | 175,667 | |||||||
| Adjustments: | |||||||||||||||||
Depreciation and amortization1 | 52,801 | 30,711 | 1,770 | 44,193 | 129,475 | ||||||||||||
Other expense, net2 | - | - | - | (6,559) | (6,559) | ||||||||||||
| Equity in earnings of affiliates, net of tax | 170 | 2,100 | - | - | 2,270 | ||||||||||||
Restructuring/Asset impairment charges, net3 | - | - | - | 9,752 | 9,752 | ||||||||||||
Changes in LIFO inventory reserves4 | - | - | - | 1,193 | 1,193 | ||||||||||||
Acquisition, integration and divestiture-related costs5 | - | - | - | 11,161 | 11,161 | ||||||||||||
Loss on divestiture of business6 | - | - | - | 2,083 | 2,083 | ||||||||||||
Net loss from derivatives7 | - | - | - | 2,154 | 2,154 | ||||||||||||
| Other non-GAAP adjustments | - | - | - | 735 | 735 | ||||||||||||
| Segment Adjusted EBITDA | $ | 213,324 | $ | 118,745 | $ | 10,176 | $ | (14,314) | $ | 327,931 | |||||||
| Net Sales | $ | 1,227,033 | $ | 617,661 | $ | 65,747 | |||||||||||
| Segment Operating Profit Margin | 13.1 | % | 13.9 | % | 12.8 | % | |||||||||||
| Segment Adjusted EBITDA Margin | 17.4 | % | 19.2 | % | 15.5 | % | |||||||||||
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $38,333, the Industrial Paper Packaging segment of $5,655, and the All Other group of businesses of $205.
2 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivables in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.
3 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $1,479, the Industrial Paper Packaging segment of $8,228, and a gain in the All Other group of businesses of $5.
4 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $1,193.
5 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $1,137 and the Industrial Paper Packaging segment of $213.
6 Included in Corporate is a loss on divestiture of business of $2,083 associated with the Industrial Paper Packaging segment related to the sale of a recycling operation in Asheville, North Carolina.
7 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $208, the Industrial Paper Packaging segment of $1,864, and the All Other group of businesses of $82.
SONOCO PRODUCTS COMPANY
Year-to-Date Reconciliations of GAAP to Non-GAAP Financial Measures
The following tables reconcile the Company's non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company's Condensed Consolidated Statements of Income for the six-month periods ended June 28, 2026 and June 29, 2025.
Adjusted Operating Profit, Adjusted Income from Continuing Operations Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS
| For the six-month period ended June 28, 2026 | |||||||||||||||||
| Dollars in thousands, except per share data | Operating Profit | Income from Continuing Operations Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | ||||||||||||
| As Reported (GAAP) | $ | 319,929 | $ | 218,757 | $ | 49,061 | $ | 172,495 | $ | 1.73 | |||||||
Acquisition, integration and divestiture-related costs1 | 8,421 | 8,421 | 1,347 | 7,074 | 0.07 | ||||||||||||
| Changes in LIFO inventory reserves | 5,521 | 5,521 | 1,367 | 4,154 | 0.04 | ||||||||||||
| Amortization of acquisition intangibles | 89,890 | 89,890 | 19,800 | 70,090 | 0.70 | ||||||||||||
| Restructuring/Asset impairment charges, net | 17,066 | 17,066 | 3,505 | 13,573 | 0.14 | ||||||||||||
Gain on divestiture of business, net2 | (775) | (775) | (188) | (587) | (0.01) | ||||||||||||
Other expense, net3 | - | 6,592 | - | 6,592 | 0.07 | ||||||||||||
| Non-operating pension costs | - | 5,416 | 1,394 | 4,022 | 0.04 | ||||||||||||
| Net loss from derivatives | 167 | 167 | 41 | 126 | - | ||||||||||||
Other adjustments4 | 3,027 | 3,027 | 10,687 | (7,660) | (0.07) | ||||||||||||
| Total adjustments | 123,317 | 135,325 | 37,953 | 97,384 | 0.98 | ||||||||||||
| Adjusted | $ | 443,246 | $ | 354,082 | $ | 87,014 | $ | 269,879 | $ | 2.71 | |||||||
| Due to rounding, individual items may not sum appropriately. | |||||||||||||||||
1 Acquisition, integration and divestiture-related costs relate primarily to the Company's December 2024 acquisition of Eviosys and the November 2025 divestiture of ThermoSafe.
2 Gain on divestiture of business, net reflects the gain of $2,640 from the sale of a recycling operation in Savannah, Georgia, partially offset by a charge of $1,865 from the final net working capital settlement related to the November 2025 divestiture of ThermoSafe.
3 Amount relates to certain pre-acquisition liabilities related to the SMP EMEA business.
4 Other adjustments to the provision for income taxes include a benefit of $14,232 related to a provision-to-return adjustment for a retroactive U.S. tax election.
SONOCO PRODUCTS COMPANY
| For the six-month period ended June 29, 2025 | |||||||||||||||||
| Dollars in thousands, except per share data | Operating Profit | Income from Continuing Operations Before Income Taxes | Provision for Income Taxes | Net Income Attributable to Sonoco | Diluted EPS | ||||||||||||
As Reported (GAAP)1 | $ | 302,527 | $ | 174,424 | $ | 60,647 | $ | 547,852 | $ | 5.51 | |||||||
Acquisition, integration and divestiture-related costs2 | 38,427 | 38,427 | 8,757 | 39,336 | 0.40 | ||||||||||||
| Changes in LIFO inventory reserves | 1,755 | 1,755 | 433 | 1,322 | 0.01 | ||||||||||||
| Amortization of acquisition intangibles | 86,154 | 86,154 | 19,005 | 66,936 | 0.67 | ||||||||||||
| Restructuring/Asset impairment charges, net | 23,333 | 23,333 | 5,397 | 17,888 | 0.18 | ||||||||||||
Loss/(Gain) on divestiture of business3 | 6,266 | 6,266 | 886 | (419,168) | (4.21) | ||||||||||||
| Non-operating pension costs | - | 6,103 | 1,559 | 4,544 | 0.05 | ||||||||||||
| Net gains from derivatives | (795) | (795) | (196) | (599) | (0.01) | ||||||||||||
Other adjustments4 | 1,994 | 1,994 | (9,804) | 14,844 | 0.14 | ||||||||||||
| Total adjustments | 157,134 | 163,237 | 26,037 | (274,897) | (2.77) | ||||||||||||
| Adjusted | $ | 459,661 | $ | 337,661 | $ | 86,684 | $ | 272,955 | $ | 2.74 | |||||||
| Due to rounding, individual items may not sum appropriately. | |||||||||||||||||
1 Operating profit, income from continuing operations before income taxes, and provision for income taxes exclude results related to discontinued operations of $663,564, $638,752, and $209,032, respectively.
2 Acquisition, integration and divestiture related costs relate mostly to the Company's December 2024 acquisition of Eviosys and the April 2025 divestiture of TFP.
3 Loss/(gain) on divestiture of business primarily consists of the gain on the sale of the Company's Thermoformed and Flexibles Packaging business, included in "Net income from discontinued operations" in the Company's Condensed Consolidated Statements of Income.
4 Other adjustments include discrete tax items primarily related to tax rate changes on AOCI and rate differences between non-U.S. jurisdictions related to acquisitions/divestitures.
SONOCO PRODUCTS COMPANY
Adjusted EBITDA1
| Six Months Ended | |||||||||||
| Dollars in thousands | June 28, 2026 | June 29, 2025 | |||||||||
| Net income attributable to Sonoco | $ | 172,495 | $ | 547,852 | |||||||
| Adjustments: | |||||||||||
| Interest expense | 89,972 | 145,305 | |||||||||
| Interest income | (12,715) | (11,751) | |||||||||
| Provision for income taxes | 49,061 | 269,679 | |||||||||
| Depreciation and amortization | 256,125 | 250,967 | |||||||||
| Non-operating pension costs | 5,416 | 6,103 | |||||||||
| Non-operating other expense | 6,592 | - | |||||||||
| Net income/(loss) attributable to noncontrolling interests | 154 | (164) | |||||||||
Restructuring/Asset impairment charges, net | 17,066 | 23,759 | |||||||||
| Changes in LIFO inventory reserves | 5,521 | 1,755 | |||||||||
| Gain on divestiture of business | (775) | (619,507) | |||||||||
| Acquisition, integration and divestiture-related costs | 8,421 | 51,103 | |||||||||
| Net loss/(gain) from derivatives | 167 | (795) | |||||||||
| Other non-GAAP adjustments | 3,027 | 1,381 | |||||||||
| Adjusted EBITDA | $ | 600,527 | $ | 665,687 | |||||||
1For the six-month period ended June 29, 2025, Adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.
The following tables reconcile segment operating profit, the closest GAAP measure of profitability, to Segment Adjusted EBITDA.
| Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation | ||||||||||||||
| For the Six Months Ended June 28, 2026 | ||||||||||||||
| Dollars in thousands | Consumer Packaging segment | Industrial Paper Packaging segment | Corporate | Total | ||||||||||
Segment and Total Operating Profit1 | $ | 277,354 | $ | 158,625 | $ | (116,050) | $ | 319,929 | ||||||
| Adjustments: | ||||||||||||||
Depreciation and amortization2 | 105,625 | 60,610 | 89,890 | 256,125 | ||||||||||
Other expense, net3 | - | - | (11,907) | (11,907) | ||||||||||
| Equity in earnings of affiliates, net of tax | 274 | 2,679 | - | 2,953 | ||||||||||
Restructuring/Asset impairment charges, net4 | - | - | 17,066 | 17,066 | ||||||||||
Changes in LIFO inventory reserves5 | - | - | 5,521 | 5,521 | ||||||||||
Acquisition, integration and divestiture-related costs6 | - | - | 8,421 | 8,421 | ||||||||||
Gain on divestiture of business7 | - | - | (775) | (775) | ||||||||||
Net loss from derivatives8 | - | - | 167 | 167 | ||||||||||
| Other non-GAAP adjustments | - | - | 3,027 | 3,027 | ||||||||||
| Segment Adjusted EBITDA | $ | 383,253 | $ | 221,914 | $ | (4,640) | $ | 600,527 | ||||||
| Net Sales | $ | 2,338,914 | $ | 1,223,013 | ||||||||||
| Segment Operating Profit Margin | 11.9 | % | 13.0 | % | ||||||||||
| Segment Adjusted EBITDA Margin | 16.4 | % | 18.1 | % | ||||||||||
SONOCO PRODUCTS COMPANY
1 As previously announced, effective January 1, 2026, results for Industrial Plastics, previously included in the All Other group of businesses, are included in the Industrial Paper Packaging segment. The Company no longer reports the results of any of its businesses in All Other.
2 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $79,875 and the Industrial Paper Packaging segment of $10,015.
3 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.
4 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $8,937 and the Industrial Paper Packaging segment of $7,196.
5 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $4,996 and the Industrial Paper Packaging segment of $525.
6 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $3,274 and the Industrial Paper Packaging segment of $152.
7 Included in Corporate is a gain of $2,640 from the sale of a recycling facility in Savannah, Georgia, part of the Industrial Paper Packaging segment, partially offset by a charge of $1,865 from the divestiture of ThermoSafe, previously part of the All Other group of businesses.
8 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $4 and the Industrial Paper Packaging segment of $163.
| Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation | |||||||||||||||||
| For the Six Months Ended June 29, 2025 | |||||||||||||||||
| Dollars in thousands | Consumer Packaging segment | Industrial Paper Packaging segment | All Other | Corporate | Total | ||||||||||||
| Segment and Total Operating Profit | $ | 301,124 | $ | 162,265 | $ | 15,125 | $ | (175,987) | $ | 302,527 | |||||||
| Adjustments: | |||||||||||||||||
Depreciation and amortization1 | 101,756 | 59,868 | 3,500 | 86,154 | 251,278 | ||||||||||||
Other expense, net2 | - | - | - | (13,076) | (13,076) | ||||||||||||
| Equity in earnings of affiliates, net of tax | 119 | 4,072 | - | - | 4,191 | ||||||||||||
Restructuring/Asset impairment charges, net3 | - | - | - | 23,333 | 23,333 | ||||||||||||
Changes in LIFO inventory reserves4 | - | - | - | 1,755 | 1,755 | ||||||||||||
Acquisition, integration and divestiture-related costs5 | - | - | - | 38,427 | 38,427 | ||||||||||||
Loss on divestiture of business6 | - | - | - | 6,266 | 6,266 | ||||||||||||
Net gains from derivatives7 | - | - | - | (795) | (795) | ||||||||||||
| Other non-GAAP adjustments | - | - | - | 1,994 | 1,994 | ||||||||||||
| Segment Adjusted EBITDA | $ | 402,999 | $ | 226,205 | $ | 18,625 | $ | (31,929) | $ | 615,900 | |||||||
| Net Sales | $ | 2,293,626 | $ | 1,205,193 | $ | 120,850 | |||||||||||
| Segment Operating Profit Margin | 13.1 | % | 13.5 | % | 12.5 | % | |||||||||||
| Segment Adjusted EBITDA Margin | 17.6 | % | 18.8 | % | 15.4 | % | |||||||||||
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $74,835, the Industrial Paper Packaging segment of $10,920, and the All Other group of businesses of $399.
2 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivables in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.
3 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $2,709, the Industrial Paper Packaging segment of $20,726, and the All Other group of businesses of $10.
SONOCO PRODUCTS COMPANY
4 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $1,755.
5 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $21,209 and the Industrial Paper Packaging segment of $431.
6 Included in Corporate are net losses on the divestiture of businesses associated with the Industrial Paper Packaging segment of $6,266, including a loss of $2,083 from the sale of a recycling facility in Asheville, N.C. and losses totaling $4,183 related to the sale of a production facility in France and the entirety of our business in Venezuela.
7 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(76), the Industrial Paper Packaging segment of $(688), and the All Other group of businesses of $(31).
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash of $67.3 million and $14.7 million in the first six months of 2026 and 2025, respectively, a higher year-over-year use of cash of $52.7 million. GAAP net income decreased by $375.0 million year over year, primarily as a result of the gain on the divestiture of TFP included in the prior year's results and higher year-over-year depreciation and amortization costs, partially offset by lower year-over-year acquisition, integration, and divestiture-related costs. Accounts receivable used $113.0 million more cash during the first six months of 2026 than in the same period of 2025. The majority of the change arose in the second quarter of 2026 as a result of higher daily trade sales in June compared to March and an increase in daily sales outstanding resulting from a changing mix in customer payment terms. The Company continues to focus on cash management and expects accounts receivable reductions over the remainder of 2026. Inventories used cash of $152.1 million in the first six months of 2026, while using $203.8 million in the same period of 2025. The significant use of cash in the first six months of both years resulted from increased inventory levels, mainly in tinplate steel, reflecting the impacts of both inflation and seasonality. The increase was greater in the prior year as inventory levels at SMP EMEA were lower at the end of 2024 following our acquisition of Eviosys on December 4, 2024. Payable to suppliers provided cash of $31.6 million and $8.1 million in the first six months of 2026 and 2025, respectively. The higher provision of cash in 2026 was due to timing of purchases and scheduled payments. The Company has continued to actively manage inventories and payment terms with customers and suppliers to both address risk and balance economic benefit amidst a challenging macroeconomic and geopolitical environment. Accrued expenses and other assets and liabilities used $78.1 million and $98.2 million of cash in the first six months of 2026 and 2025, respectively, for a lower year-over-year use of cash of $20.0 million. The primary drivers contributing to the change were lower year-over-year interest accruals, an increase in collection of miscellaneous non-trade receivables, and lower payments for management incentive compensation, partially offset by higher year-over-year cash payments for acquisition, integration and divestiture-related costs and restructuring actions. Additionally, prepaid expenses used $33.6 million of cash in 2026 and provided $9.0 million of cash in 2025, a year-over-year change of $42.6 million, primarily resulting from higher advance payments for steel purchases from China. Income taxes payable and other income tax items used $100.7 million of cash in the first six months of 2026, compared to providing $197.7 million of cash in the same period of 2025, primarily due to the payment of taxes during the first six months of 2026 on the gains from the 2025 divestitures of TFP and ThermoSafe.
Investing activities used $132.5 million of cash in the first six months of 2026 and provided $1,645.3 million of cash in the first six months of 2025. The year-over-year reduction of $1,777.8 million was primarily the result of lower net proceeds from the sale of businesses. During the first six months of 2025, the Company received net cash proceeds totaling $1,807.5 million from the sale of TFP in addition to proceeds totaling $7.4 million from other divestitures. Net proceeds from the sale of businesses during the first six months of 2026 included $4.0 million of cash proceeds from the sale of a recycling facility in Savannah, Georgia, offset by cash payments for final net working capital settlements related to the 2025 divestitures of TFP and ThermoSafe, totaling $15.2 million and $1.9 million, respectively. Cost of acquisitions, net of cash acquired, in the first six months of 2025 included a final working capital settlement of $16.5 million related to the December 2024 acquisition of Eviosys. Capital expenditures during the first six months of 2026 totaled $125.8 million, a decrease of $61.7 million from the same period last year. The reduction reflects the Company's intention of maintaining capital expenditures at approximately 4% of sales in order to preserve balance sheet flexibility, support debt reduction, and maintain a focus on core growth. Investments in affiliated companies and other net investing proceeds provided a $4.2 million year-over-year increase in cash related to proceeds from company-owned life insurance and dividends from an affiliated company representing a return of capital.
Financing activities provided $7.1 million of cash in the first six months of 2026 and used $1,776.8 million of cash in the first six months of 2025. Net borrowings during the first six months of 2026, primarily from the issuance of commercial paper, provided $116.6 million of cash, whereas net debt repayments during the first six months of 2025, used $1,668.9
SONOCO PRODUCTS COMPANY
million. Net debt repayments in the prior year included the repayment upon maturity of the $400 million aggregate principal amount of the Company's 1.800% notes due February 2025, largely funded by commercial paper borrowings, and the April 2025 repayment of the outstanding $1,500 million principal amount of borrowings under the Company's 364-day term loan facility and a portion of the Company's outstanding commercial paper borrowings using cash proceeds from the sale of TFP. The change in book cash overdrafts was a lower year-over-year provision of cash of $2.6 million. Cash used to pay dividends increased by $2.2 million year over year, reflecting the increase in the quarterly dividend payment from $0.53 per share to $0.54 per share approved by the Company's Board of Directors in April 2026. Cash used to repurchase the Company's common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $7.0 million in the six-month period ended June 28, 2026, compared to $10.6 million in the corresponding prior-year period.
During the six-month period ended June 28, 2026, the Company reported a net decrease in cash and cash equivalents of $17.1 million due to currency translation adjustments resulting from a stronger U.S. dollar relative to certain foreign currencies, principally the euro, in which the Company's cash and cash equivalents were held.
The Company's cash balances are held in numerous locations throughout the world. At June 28, 2026 and December 31, 2025, approximately $148.6 million and $193.3 million, respectively, of the Company's reported cash and cash equivalents balances of $168.6 million and $378.4 million, respectively, were held outside of the United States by its foreign subsidiaries. Cash held outside of the United States is available to meet local liquidity needs or for capital expenditures, acquisitions, and other offshore growth opportunities.
The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either a cash deposit or a borrowing position through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because it maintains a security interest in the cash deposits and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both the cash deposit and borrowing positions.
The Company maintains a revolving credit facility with total commitments of $1.25 billion and a maturity date of May 3, 2029. The Company's $1.25 billion commercial paper program is supported by the revolving credit facility. At June 28, 2026, the Company had $116 million in commercial paper balances outstanding; accordingly, the committed capacity available for drawdown under its revolving credit facility at June 28, 2026 was $1.134 billion. The Company has the contractual right to draw funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market.
On March 23, 2026, the Company entered into a credit agreement with the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent (the "Term Credit Agreement") that provides the Company with a delayed draw term loan facility in an aggregate principal amount of up to $300 million on an unsecured basis (the "Term Loan Facility"). The Term Loan Facility may be drawn, subject to the satisfaction of certain conditions, on or prior to September 13, 2026. Borrowings under the Term Loan Facility, net of any prepayments, will become payable in full on the second anniversary of the Funding Date (as defined in the Term Credit Agreement) and will bear interest at a fluctuating rate per annum equal to, at the Company's option, (i) the forward-looking Secured Overnight Financing Rate term rate (such borrowings, "Term SOFR Loans"), (ii) a base rate (such borrowings, "Base Rate Loans"), or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on the Company's credit ratings, ranging from 0.850% to 1.100% per annum for Term SOFR Loans and from 0.000% to 0.100% per annum for Base Rate Loans. As of June 28, 2026, no draws had been made under the Term Loan Facility.
At June 28, 2026, the Company had scheduled debt maturities of approximately $968.8 million over the next twelve months. The Company believes cash on hand and available credit, including the Term Loan Facility, combined with expected net cash flows generated from operating and investing activities, will provide sufficient liquidity to cover these and other cash flow needs of the Company over the next twelve months and beyond.
Certain of the Company's debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements. As of June 28, 2026, the Company's interest coverage and net worth were substantially above the minimum levels required under these covenants.
SONOCO PRODUCTS COMPANY
Acquisitions and internal investments are key elements of the Company's growth strategy. The Company believes that its cash on hand, coupled with cash generated from operations and available borrowing capacity, will enable it to support this strategy. Although the Company believes that it has excess borrowing capacity beyond its current lines of credit, there can be no assurance that such financing would be available or available on terms that are acceptable to the Company. The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic. Should these efforts result in the future sale of any plants or business units, management expects to utilize the proceeds to pay down debt and/or invest in growth projects or strategic acquisitions.
The Company anticipates making additional contributions to its other pension and postretirement plans of approximately $12.8 million during the remainder of 2026, resulting in expected total contributions to these plans of approximately $23.2 million in 2026. Future funding requirements beyond the current year will vary depending largely on investment performance, future actuarial assumptions, and legislative actions.
OTHER ITEMS
Fair Value Measurements, Foreign Exchange Exposure and Risk Management
Certain assets and liabilities are reported in the Company's financial statements at fair value, the fluctuation of which can impact the Company's financial position and results of operations. Items reported by the Company at fair value on a recurring basis include derivative contracts and pension-related assets. The valuation of a majority of these items is based either on quoted prices in active and accessible markets or on other observable inputs.
As a result of operating globally, the Company is exposed to changes in foreign exchange rates. The exposure is well diversified, as the Company's facilities are located throughout the world, and the Company generally sells in the same countries where it produces with both revenue and costs transacted in the local currency. The Company monitors these exposures and uses foreign currency forward contracts and other risk management instruments to manage exposure to changes in foreign currency cash flows and the translation of monetary assets and liabilities on the Company's condensed consolidated financial statements by hedging a portion of forecasted transactions that are denominated in foreign currencies, foreign currency assets and liabilities, or its net investment in foreign subsidiaries. The Company's foreign operations are exposed to political, geopolitical, and cultural risks, but these risks are mitigated by diversification and the relative stability of the countries in which the Company has significant operations.
The economy in Venezuela has been considered highly inflationary under U.S. GAAP since 2010. Accordingly, the Company considered the U.S. dollar to be the functional currency of its Venezuelan operations and used the official exchange rate when remeasuring the financial results of those operations since January 1, 2010. Economic conditions in Venezuela worsened considerably over the past several years with no indications that conditions were likely to improve in the foreseeable future. As a result, the Company sold its operations in Venezuela during the first quarter of 2025, recognizing a loss in the amount of $5.4 million, including $3.8 million of cumulative translation losses that were reclassified from accumulated other comprehensive (loss)/income.
Turkey has been deemed to be a highly inflationary economy under U.S. GAAP since the first quarter of 2022. Accordingly, the Company considers the U.S. dollar to be the functional currency of its operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S. dollars with changes recorded through earnings. The cumulative impact of applying highly inflationary accounting to Turkey has been a pretax charge to earnings of $9.0 million ($6.9 million after tax), including $(0.2) million ($(0.2) million after tax) during the six-month period ended June 28, 2026. The magnitude of future earnings impacts, however, is uncertain as such impacts are dependent upon unpredictable movements in the Turkish lira relative to the U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges. However, the Company believes its exposure is limited to its net investment in Turkey, which was approximately $45 million as of June 28, 2026.
SONOCO PRODUCTS COMPANY
The Company is a purchaser of various raw material inputs such as recovered paper, energy, steel, aluminum, and plastic resin. The Company generally does not engage in significant hedging activities for these purchases other than for energy and, from time to time, aluminum, because there is usually a high correlation between the primary input costs and the ultimate selling price of its products. Inputs are generally purchased at market or at fixed prices that are established with individual suppliers as part of the purchase process for quantities expected to be consumed in the ordinary course of business. On occasion, where the correlation between selling price and input price is less direct, the Company may enter into derivative contracts such as futures or swaps to manage the effect of price fluctuations. In addition, the Company may occasionally use traditional, unleveraged interest-rate swaps to manage its mix of fixed and variable rate debt and control its exposure to interest rate movements within select ranges.
At June 28, 2026, the Company had derivative contracts outstanding to hedge the prices on a portion of anticipated aluminum purchases. These contracts, some of which qualify as cash flow hedges, include aluminum swaps totaling 6,129 metric tons. The fair value of the Company's commodity cash flow hedges netted to gain positions of $1.4 million and $1.7 million at June 28, 2026 and December 31, 2025, respectively. The amount of the gain included in accumulated other comprehensive (loss)/income at June 28, 2026 expected to be reclassified to the income statement during the next twelve months is $1.3 million.
The Company routinely enters into derivative currency contracts to mitigate the risk of unfavorable fluctuations in the exchange rate on certain anticipated foreign currency cash flows. The total market value of these instruments resulted in a net gain position of $1.8 million and $49 thousand at June 28, 2026 and December 31, 2025, respectively. In addition, at June 28, 2026, the Company had various currency contracts outstanding to hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables. Although placed as economic hedges, the Company does not apply hedge accounting to these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur. The fair value of the Company's non-designated derivatives position was a loss of $0.6 million and $1.1 million at June 28, 2026 and December 31, 2025, respectively.
In April 2024, the Company entered into cross-currency swap agreements with a total notional amount of $500 million, maturing on May 1, 2027, to effectively convert a portion of the Company's fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt at the prevailing market rate at execution.
In December 2024, the Company entered into additional cross-currency swap agreements with a total notional amount of $1.5 billion, including $500 million maturing on September 1, 2026, $500 million maturing on September 1, 2029, and $500 million maturing on May 1, 2030. The swaps effectively convert a portion of the Company's fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt at the prevailing market rate at execution.
On June 30, 2025, the Company entered into additional cross-currency swap agreements with a total notional amount of $285 million, maturing on February 1, 2027. The swaps effectively convert a portion of the Company's fixed-rate U.S. dollar-denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt at the prevailing market rate at execution.
All of the Company's cross-currency swap agreements are designated as net investment hedges for accounting purposes and have the risk management objective of managing foreign currency risk relating to net investments in certain European subsidiaries denominated in euros.
The gain or loss on the net investment hedge derivative instruments is included in the "Foreign currency translation" component of "Accumulated other comprehensive (loss)/income" until the net investment is sold, diluted, or liquidated. Net interest income on the cross-currency swaps totaling $11.1 million and $22.0 million for the three and six months ended June 28, 2026 are excluded from the net investment hedge effectiveness assessment and are recorded in "Interest expense" in the Company's Condensed Consolidated Statements of Income. The assumptions used in measuring fair value of the cross-currency swaps are considered level 2 inputs, which are based upon the Euro-to-U.S. dollar exchange rate market.
The fair value of the Company's net investment hedges was a loss position of $144.7 million and $207.2 million at June 28, 2026 and December 31, 2025, respectively. Foreign currency translation loss of $107.8 million (net of income taxes of $36.9 million) and a loss of $154.4 million (net of income taxes of $52.8 million) were reported as components of "Accumulated other comprehensive (loss)/income" within "Foreign currency items" at June 28, 2026 and December 31, 2025, respectively.
SONOCO PRODUCTS COMPANY
The Company has an investment in preferred stock of a nonaffiliated private company that is accounted for under the measurement alternative of cost less impairment, adjusted for any qualifying observable price changes. Observable price changes would consist of Level 2 inputs based on privately negotiated transactions with the nonaffiliated company. The preferred stock balance of $21.2 million is included in "Other Assets" in the Company's Condensed Consolidated Balance Sheet as of June 28, 2026.
During the first six months of 2026, the U.S. dollar strengthened against most of the functional currencies in which the Company's foreign investments are held, including the euro, the British pound, the Polish zloty, the Danish krone, and the Indonesian rupiah. During this same period, the U.S. dollar weakened against the Brazilian real, the Mexican peso, and the Colombian peso. The impact of these changes, and the changes in the net investment hedge discussed above, resulted in a net translation loss of approximately $111 million being recorded in "Accumulated other comprehensive (loss)/income" during the six-month period ended June 28, 2026.
Restructuring and Impairment
Information regarding restructuring charges and restructuring-related asset impairment charges is provided in Note 6 to the Company's Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.
New Accounting Pronouncements
Information regarding new accounting pronouncements is provided in Note 3 to the Company's Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.