Sonoco Products Company Reconciliation of Non-GAAP Financial Measures
In accordance with the SEC's Regulation G, the following provides definitions of the non-GAAP financial measures used by the Company, together with the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), and a reconciliation of the differences between the non-GAAP financial measures disclosed and the most directly comparable financial measures calculated in accordance with GAAP.
Definition and Reconciliation of Non-GAAP Financial Measures
The Company's results, determined in accordance with U.S. generally accepted accounting principles ("GAAP"), are referred to as "as reported" or "GAAP" results. 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 earnings per share ("EPS")), reflect adjustments to the Company's GAAP operating results to exclude amounts, including the associated tax effects, 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.
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. Net Debt is defined as the total of the Company's short and long-term debt less cash and cash equivalents.
Segment Adjusted EBITDA is reconciled to the closest GAAP measure of segment profitability, segment operating profit as the Company does not calculate net income by segment. 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; 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 other general corporate expenses have been allocated as operating costs to each of the Company's reportable segments and All Other, except for costs related to discontinued operations.
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.
The Company does not provide full year 2026 GAAP guidance due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast without unreasonable efforts: restructuring costs and restructuring-related impairment charges, acquisition/divestiture-related costs, gains or losses from the sale of businesses and the income tax effects of these items and/or other income tax-related events. These items could have a significant impact on the Company's future GAAP financial results. Accordingly, quantitative reconciliations of Adjusted EPS and Adjusted EBITDA guidance to the nearest comparable GAAP measures have been omitted in reliance on the exception provided by Item 10 of Regulation S-K.
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.
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 each of the periods presented:
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 EPSFor the three-month period ended September 27, 2026 Income
from
Continuing
Dollars in thousands, except per share data
Operating (Loss)/ Profit
Operations Before Income Taxes
Provision for Income Taxes
Net (Loss)/ Income Attributable to Sonoco
Diluted EPS
As Reported (GAAP) | $ (637,956) $ | (690,418) $ | 44,138 $ | (732,102) $ | (7.36) |
Acquisition, integration and divestiture-related costs1 | 2,161 | 2,161 | 318 | 1,843 | 0.01 |
Amortization of acquisition intangibles | 45,633 | 45,633 | 9,938 | 35,695 | 0.36 |
Restructuring/Asset impairment charges, net2 | 856,435 | 856,435 | 6,839 | 849,694 | 8.54 |
Non-operating pension costs | - | 2,749 | 712 | 2,037 | 0.02 |
Net gains from derivatives | (106) | (106) | (26) | (80) | - |
Other adjustments3 | 1,874 | 1,874 | (8,237) | 10,111 | 0.10 |
Total adjustments4 | 905,997 | 908,746 | 9,544 | 899,300 | 9.03 |
Adjusted | $ 268,041 $ | 218,328 $ | 53,682 $ | 167,198 $ | 1.67 |
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 Restructuring/Asset impairment charges, net, primarily reflect total goodwill impairment charges of $828,875 recognized during the third quarter of 2026, including $802,000 and $26,875 for the Consumer Packaging EMEA/APAC and Global Paper Products APAC reporting units, respectively.
3 Other adjustments include discrete tax items primarily related to provision-to-return adjustments for the TFP and ThermoSafe divestitures and a retroactive U.S. tax election.
4 The difference between GAAP Gross Profit of $405,320 and Adjusted Gross Profit of $405,258 is attributable to other items totaling $(62). The financial measure titled "SG&A Expenses, Net of Other Income" on the schedule "P&L Summary Third Quarter: 2026 vs. 2025" is the sum of the GAAP measures of "Selling, general and administrative expenses" and "Restructuring/Asset impairment charges, net", $1,043,276, adjusted for the remaining items above, for an Adjusted total of $137,217.
For the three-month period ended September 28, 2025 Income
from
Continuing Operations
Dollars in thousands, except per share data
Operating Profit
Before Income Taxes
Provision for Income Taxes
Net Income Attributable to Sonoco
Diluted EPS
As Reported (GAAP) $ 194,966 $ 127,762 $ 7,717 $ 122,918 $ 1.23
Acquisition, integration and divestiture-
related costs1 | 9,318 | 9,318 | 2,377 | 6,941 | 0.07 |
Amortization of acquisition intangibles | 49,034 | 49,034 | 10,581 | 38,453 | 0.39 |
Restructuring/Asset impairment charges, | |||||
net | 48,388 | 48,388 | 11,117 | 37,221 | 0.37 |
Loss/(Gain) on divestiture of business2 | 3,031 | 3,031 | 27,569 | (24,538) | (0.25) |
Non-operating pension costs | - | 3,054 | 631 | 2,423 | 0.02 |
Net losses from derivatives | 2,035 | 2,035 | 502 | 1,533 | 0.02 |
Other adjustments3 | 1,568 | 1,568 | (4,652) | 6,220 | 0.07 |
Total adjustments4 | 113,374 | 116,428 | 48,125 | 68,253 | 0.69 |
Adjusted | $ 308,340 | $ 244,190 | $ 55,842 $ | 191,171 | $ 1.92 |
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 April 2025 divestiture of TFP.
2 Loss/(Gain) on divestiture of business includes the recognition of a deferred tax benefit on the outside basis
difference related to the ThermoSafe business being classified as held for sale.
3 Other adjustments include an adjustment to deferred taxes from the post-acquisition restructuring of the partitions business, provision-to-return adjustments related to the divested TFP business, and an increase in the valuation allowance on foreign tax credits.
4 The difference between GAAP Gross Profit of $467,351 and Adjusted Gross Profit of $467,511 is attributable to amortization of the fair value step-up of finished goods inventory at Eviosys of $12 and other items totaling
$148. The financial measure titled "SG&A Expenses, Net of Other Income" on the schedule "P&L Summary Third Quarter: 2026 vs. 2025" is the sum of the GAAP measures of "Selling, general and administrative expenses", "Restructuring/Asset impairment charges, net" and "Loss on divestiture of business", $272,385, adjusted for the remaining items above, for an Adjusted total of $159,171.
Adjusted EBITDA1
Three Months Ended
Dollars in thousands
September 27,
2026
September 28,
2025
Net (loss)/income attributable to Sonoco | $ (732,102) $ | 122,918 |
Adjustments: | ||
Interest expense | 46,665 | 61,243 |
Interest income | (5,223) | (4,634) |
Provision for income taxes | 44,138 | 7,717 |
Depreciation and amortization | 134,857 | 131,656 |
Non-operating pension costs | 2,749 | 3,054 |
Net income attributable to noncontrolling interests | 235 | 147 |
Restructuring/Asset impairment charges, net | 856,435 | 48,388 |
Loss on divestiture of business | - | 3,031 |
Acquisition, integration and divestiture-related costs | 2,161 | 9,318 |
Net (gain)/loss from derivatives | (106) | 2,035 |
Other non-GAAP adjustments | 1,874 | 1,568 |
Adjusted EBITDA | $ 351,683 $ | 386,441 |
1 For the period ended September 28, 2025, adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.
Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation For the Three Months Ended September 27, 2026
Consumer Packaging
Industrial Paper Packaging
Dollars in thousands | segment | segment | Corporate | Total |
Segment and Total Operating Profit/(Loss)1 | $ 178,563 | $ 87,973 | $ (904,492) $ | (637,956) |
Adjustments: | ||||
Depreciation and amortization2 | 58,048 | 31,176 | 45,633 | 134,857 |
Other expense, net3 | - | - | (8,271) | (8,271) |
Equity in earnings of affiliates, net of tax | 217 | 2,472 | - | 2,689 |
Restructuring/Asset impairment charges, net4 | - | - | 856,435 | 856,435 |
Acquisition, integration and divestiture-related costs5 | - | - | 2,161 | 2,161 |
Net gain from derivatives6 | - | - | (106) | (106) |
Other non-GAAP adjustments | - | - | 1,874 | 1,874 |
Segment Adjusted EBITDA $ 236,828 $ 121,621 $ (6,766) $ 351,683
Net Sales $1,396,012 $ 645,563
Segment Operating Profit Margin | 12.8 % | 13.6 % |
Segment Adjusted EBITDA Margin | 17.0 % | 18.8 % |
1As 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.
2Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of
$40,576 and the Industrial segment of $5,057.
3These 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 segment.
4Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of
$835,670 and the Industrial segment of $20,196.
5Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer segment of $433 and the Industrial segment of $7.
6Included in Corporate are net gains from derivatives associated with the Consumer segment of $3 and the Industrial segment of $(109).
Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation For the Three Months Ended September 28, 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 | $ 208,985 $ 93,773 $ 14,386 $ (122,178) $ 194,966 |
Adjustments: | |
Depreciation and amortization1 | 50,419 30,896 1,307 49,034 131,656 |
Other expense, net2 | - - - (7,541) (7,541) |
Equity in earnings of affiliates, net of tax | 190 2,830 - - 3,020 |
Restructuring/Asset impairment charges, net3 | - - - 48,388 48,388 |
Acquisition, integration and divestiture-related costs4 | - - - 9,318 9,318 |
Loss on divestiture of business5 | - - - 3,031 3,031 |
Net loss from derivatives6 | - - - 2,035 2,035 |
Other non-GAAP adjustments | - - - 1,568 1,568 |
Segment Adjusted EBITDA | $ 259,594 $ 127,499 $ 15,693 $ (16,345) $ 386,441 |
Net Sales $1,438,246 $ 613,611 $ 79,251 | |||
Segment Operating Profit Margin | 14.5 % | 15.3 % | 18.2 % |
Segment Adjusted EBITDA Margin | 18.0 % | 20.8 % | 19.8 % |
1Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of
$43,397, the Industrial segment of $5,485, and the All Other group of businesses of $152.
2These 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 segment.
3Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of
$35,027 and the Industrial segment of $11,181.
4Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer segment of $1,293 and the Industrial segment of $97.
5Included in Corporate is a loss on divestiture of business of $31 associated with the Industrial segment related to the sale of a recycling operation in Asheville, North Carolina, and a $3,000 charge related to the divestiture of ThermoSafe, previously part of the All Other group of businesses.
6Included in Corporate are net losses from derivatives associated with the Consumer segment of $196, the
Industrial segment of $1,760, and the All Other group of businesses of $79.
For the nine-month period ended September 27, 2026 Income
from
Continuing
Dollars in thousands, except per share
Operating (Loss)/
Operations Before Income
Provision for Income
Net (Loss)/ Income Attributable
data | Profit | Taxes | Taxes | to Sonoco | Diluted EPS |
As Reported (GAAP) | $ (318,027) | $ (471,661) | $ 93,199 | $ (559,607) | $ (5.63) |
Acquisition, integration and divestiture-related costs1 | 10,582 | 10,582 | 1,665 | 8,917 | 0.09 |
Changes in LIFO inventory reserves | 5,521 | 5,521 | 1,367 | 4,154 | 0.04 |
Amortization of acquisition intangibles | 135,523 | 135,523 | 29,738 | 105,785 | 1.06 |
Restructuring/Asset impairment charges, net2 | 873,501 | 873,501 | 10,344 | 863,267 | 8.68 |
Gain on divestiture of business, net3 | (775) | (775) | (188) | (587) | (0.01) |
Other expense, net4 | - | 6,592 | - | 6,592 | 0.07 |
Non-operating pension costs | - | 8,165 | 2,106 | 6,059 | 0.06 |
Net losses from derivatives | 61 | 61 | 15 | 46 | - |
Other adjustments | 4,901 | 4,901 | 2,450 | 2,451 | 0.02 |
Total adjustments | 1,029,314 | 1,044,071 | 47,497 | 996,684 | 10.01 |
Adjusted | $ 711,287 | $ 572,410 | $ 140,696 | $ 437,077 | $ 4.38 |
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 Restructuring/Asset impairment charges, net, primarily reflect total goodwill impairment charges of $828,875 recognized during the third quarter of 2026, including $802,000 and $26,875 for the Consumer Packaging EMEA/APAC and Global Paper Products APAC reporting units, respectively.
3 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.
4 Amount relates to certain pre-acquisition liabilities relevant to the SMP EMEA business.
For the nine-month period ended September 28, 2025 Income
from
Continuing Operations
Dollars in thousands, except per share data
Operating Profit
Before Income Taxes
Provision for Income Taxes
Net Income Attributable
to Sonoco Diluted EPS
As Reported (GAAP)1 | $ 497,493 | $ 302,186 | $ 68,364 $ | 670,770 $ | 6.74 |
Acquisition, integration and divestiture-related costs2 | 47,745 | 47,745 | 11,134 | 46,277 | 0.47 |
Changes in LIFO inventory reserves | 1,755 | 1,755 | 433 | 1,322 | 0.01 |
Amortization of acquisition intangibles | 135,188 | 135,188 | 29,586 | 105,389 | 1.06 |
Restructuring/Asset impairment charges, net | 71,721 | 71,721 | 16,514 | 55,109 | 0.55 |
Loss/(Gain) on divestiture of business3 | 9,297 | 9,297 | 28,455 | (443,706) | (4.46) |
Non-operating pension costs | - | 9,157 | 2,190 | 6,967 | 0.07 |
Net losses from derivatives | 1,240 | 1,240 | 306 | 934 | 0.01 |
Other adjustments4 | 3,562 | 3,562 | (14,456) | 21,064 | 0.21 |
Total adjustments | 270,508 | 279,665 | 74,162 | (206,644) | (2.08) |
Adjusted | $ 768,001 | $ 581,851 | $ 142,526 $ | 464,126 $ | 4.66 |
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 primarily 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 TFP, included in "Net income from discontinued operations" in the Company's Condensed Consolidated Statements of Income, and the recognition of a deferred tax benefit on the outside basis difference related to the ThermoSafe business being classified as held for sale.
4 Other adjustments include discrete tax items primarily related to tax rate changes, an adjustment to deferred taxes from the post-acquisition restructuring of the partitions business, provision-to-return adjustments related to the divested TFP business, and an increase in the valuation allowance on foreign tax credits.
Free Cash Flow
The Company uses the non-GAAP financial measure of "Free Cash Flow," which it defines as cash flow from operations minus net capital expenditures. Net capital expenditures are defined as capital expenditures minus proceeds from the disposition of capital assets. Free Cash Flow may not represent the amount of cash flow available for general discretionary use because it excludes non-discretionary expenditures, such as mandatory debt repayments and required settlements of recorded and/or contingent liabilities not reflected in cash flow from operations.
The reconciliation of the GAAP measure "Net cash (used)/provided by operating activities" to the non-GAAP measure "Free cash flow" is set forth in the table below:
Three Months Ended | |
March 29, 2026 June 28, 2026 September 27, 2026 |
Net cash (used)/provided by operating activities | $ (367,928) $ | 300,620 $ | 284,856 |
Purchases of property, plant, and equipment | (62,079) | (63,677) | (62,908) |
Proceeds from the sale of assets, net | 1,719 | 164 | 11,876 |
Net capital expenditures | (60,360) | (63,513) | (51,032) |
Free cash flow | $ (428,288) $ | 237,107 $ | 233,824 |
Three Months Ended | |
March 30, 2025 June 29, 2025 September 28, 2025 |
Net cash (used)/provided by operating activities | $ (208,094) $ | 193,441 $ | 291,549 |
Purchases of property, plant, and equipment | (92,657) | (94,826) | (65,928) |
Proceeds from the sale of assets, net | 474 | 616 | 4,070 |
Net capital expenditures | (92,183) | (94,210) | (61,858) |
Free cash flow | $ (300,277) $ | 99,231 $ | 229,691 |
Three Months Ended | |
March 31, 2024 June 30, 2024 September 29, 2024 |
Net cash provided by operating activities | $ 166,235 $ | 109,254 $ | 162,149 |
Purchases of property, plant, and equipment | (86,458) | (93,236) | (91,638) |
Proceeds from the sale of assets, net | 101 | 232 | 4,182 |
Net capital expenditures | (86,357) | (93,004) | (87,456) |
Free cash flow | $ 79,878 $ | 16,250 $ | 74,693 |
Three Months Ended | |
April 2, 2023 July 2, 2023 October 1, 2023 |
Net cash provided by operating activities | $ 98,002 $ | 250,581 $ | 268,294 |
Purchases of property, plant, and equipment | (83,401) | (78,289) | (93,184) |
Proceeds from the sale of assets, net | 71,405 | 448 | 884 |
Net capital expenditures | (11,996) | (77,841) | (92,300) |
Free cash flow | $ 86,006 $ | 172,740 $ | 175,994 |
Net Debt
The reconciliation of the GAAP measure "Total Debt" to the non-GAAP measure of "Net Debt" is set forth in the table below:
June 28, 2026 | September 27, 2026 | |
Total Debt | $ 4,453,216 | $ 4,291,666 |
Less: Cash and cash equivalents | 168,648 | 183,101 |
Net Debt | $ 4,284,568 | $ 4,108,565 |