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SONOCO PRODUCTS CO (SON)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record net sales of $1.709B and record adjusted EBITDA of $338M, driven by a full quarter of Metal Packaging EMEA (Eviosys) and strong U.S. metals; adjusted EPS was $1.38 while GAAP EPS was $0.55 .
  • Reaffirmed FY25 guidance: adjusted EPS $6.00–$6.20, adjusted EBITDA $1.3–$1.4B, and operating cash flow $800–$900M; cash dividend raised to $0.53 per share, marking 100 consecutive years of dividends .
  • Wall Street consensus (S&P Global) for Q1 2025 was EPS $1.41* and revenue $2.040B*; actual EPS missed slightly and revenue missed materially; adjusted EBITDA beat company’s YoY targets, but SPGI EBITDA definition differs from company’s adjusted EBITDA (see Estimates Context) .
  • Catalysts: Eviosys integration synergies raised to ~$40M in 2025 (on path to $100M by end-2026), URB price implementation expected to benefit 2H margins, and net leverage reduced to <4x post-TFP sale .

What Went Well and What Went Wrong

What Went Well

  • Record results: net sales up 30.6% YoY to $1.709B and adjusted EBITDA up 38% YoY to $338M driven by Eviosys and positive price/cost; adjusted EPS up 23% YoY to $1.38 .
  • Metal Packaging strength: U.S. aerosol volume +~25% and food cans +~10% with ~10% organic volume/mix growth; EMEA margins and profitability improved with ~23% EBITDA increase YoY .
  • Strategy execution: Completed $1.8B TFP sale, applied ~$1.5B after-tax proceeds to repay term loan; net leverage below 4.0x and reaffirmed FY25 outlook .

What Went Wrong

  • Revenue vs consensus: Q1 revenue missed S&P Global consensus materially ($1.709B actual vs $2.040B* estimate), suggesting expectations overshot combined portfolio seasonality and discontinued operations treatment .
  • Working capital drag: Operating cash flow was $(208)M and Free Cash Flow $(300)M due to seasonal working capital build in Metal Packaging EMEA, expected to reverse in 2H .
  • Industrial volume softness: Segment net sales fell 6% YoY; volumes lower across the segment and FX headwinds, though margin expanded on price/cost and productivity .

Financial Results

Consolidated Headline Results (oldest → newest)

Metric ($USD Millions unless noted)Q3 2024Q4 2024Q1 2025
Net Sales$1,675.9 $1,363.3 $1,709.2
GAAP EPS (diluted) ($)$0.51 $(0.44) $0.55
Adjusted EPS (diluted) ($)$1.49 $1.00 $1.38
Adjusted EBITDA$281.5 $246.7 $337.8
Adjusted EBITDA Margin (%)16.8% —16.6%

Year-over-Year Q1 Comparison

Metric ($USD Millions unless noted)Q1 2024Q1 2025Change
Net Sales$1,308.6 $1,709.2 +31%
GAAP EPS (diluted) ($)$0.66 $0.55 (17%)
Adjusted EPS (diluted) ($)$1.12 $1.38 +23%
Adjusted EBITDA$244.8 $337.8 +38%

Q1 2025 vs Wall Street Consensus (S&P Global)

MetricConsensus EstimateActualBeat/Miss
EPS (diluted) ($)$1.41*$1.38 Miss
Revenue ($USD Billions)$2.040*$1.709 Miss
EBITDA ($USD Millions)$336.4*$337.8 See note

Values retrieved from S&P Global.
Note: SPGI’s EBITDA “actual” was 290.3* vs Sonoco’s reported adjusted EBITDA $337.8M, reflecting definitional differences (company adjusts for items per non-GAAP policy) . Values retrieved from S&P Global.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentNet Sales Q1’24 ($MM)Net Sales Q1’25 ($MM)Segment Operating Profit Q1’24 ($MM)Segment Operating Profit Q1’25 ($MM)Segment Adjusted EBITDA Q1’24 ($MM)Segment Adjusted EBITDA Q1’25 ($MM)
Consumer Packaging$581.7 $1,066.6 $58.6 $140.8 $83.5 $189.7
Industrial Paper Packaging$593.1 $557.7 $65.8 $71.1 $95.5 $101.4
All Other$133.9 $84.9 $17.1 $11.9 $20.8 $14.5

KPIs and Balance Sheet

KPIQ4 2024Q1 2025
Operating Cash Flow ($MM)$833.8 FY24 $(208.1) Q1
Capital Expenditures ($MM)$377.6 FY24 $92.2 Q1
Free Cash Flow ($MM)$456.3 FY24 $(300.3) Q1
Cash & Equivalents ($MM)$431.0 $181.8
Total Debt ($MM)$7,134.0 approx. (long-term + current) $7,126.1 approx. (long-term + current)
Liquidity Available ($MM)$1,700.0 (12/31/24) $914.0 (3/30/25)
Dividend per Share ($)$0.52 (Q1) Raised to $0.53 (4/16/25)

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024, issued 2/18/25)Current Guidance (Q1 2025, issued 4/29/25)Change
Adjusted EPSFY 2025$6.00–$6.20 $6.00–$6.20 Maintained
Adjusted EBITDA ($MM)FY 2025$1,300–$1,400 $1,300–$1,400 Maintained
Operating Cash Flow ($MM)FY 2025$750–$850 $800–$900 Raised
Dividend per Share ($)Ongoing$0.52 (Q4 run rate) $0.53 declared 4/16/25 Raised

Management reiterated confidence despite macro/tariff risks and emphasized portfolio resilience with >2/3 sales in consumer food packaging .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Eviosys integration & synergiesAnnounced deal; financing secured; accretive; closing by YE 2024 . Reinforced synergy plan and leverage reduction targets .Synergy run-rate increased to ~$40M in 2025; on path to $100M by end-2026; EMEA EBITDA up ~23% YoY .Improving
Tariffs/macro resilienceMacro/inflation risks highlighted . Broader geopolitical and tariff risk disclosures .Portfolio positioned to manage tariffs; local manufacturing network; ability to adjust pricing; >2/3 sales in consumer food packaging .Actively managed
Industrial pricing (URB) & OCCPrice/cost headwinds noted .URB price increase implementation progressing; expect 2H benefit; OCC assumed ~$90–$95 in 2H (Q1 ~$80–$85) .Margin defense strengthening
Volume by region/productsQ3: consumer and industrial volumes higher YoY .Consumer organic volumes ~+4%; U.S. metals strong (aerosol +~25%, food cans +~10%); EMEA metals volumes down mid-single digit but profitability up .Mixed (US strong; EMEA volume softer)
Leverage & cashFY24 FCF $456M; plan to delever post-Eviosys .Net leverage <4x post TFP repayment; target 3.0–3.3x by end-2026; liquidity ~$915M .Improving

Management Commentary

  • “Our global team achieved record top-line and adjusted EBITDA performance, growing 31% and 38%, respectively, while adjusted earnings per share rose 23% despite higher-than-expected interest expense, taxes and the negative impact of currency exchange rates.” — CEO Howard Coker .
  • “Our Metal Packaging U.S. business achieved approximately 10% growth in organic volume/mix… aerosol business was up roughly 25%… food can business was probably 10-plus percent.” — Management on U.S. metals strength .
  • “We have used after-tax proceeds of approximately $1.56 billion to significantly reduce debt… net leverage ratio is below 4.0X.” — CEO on balance sheet .
  • “We are reaffirming our full year guidance… adjusted EPS $6 to $6.20… operating cash flow $800 million to $900 million.” — Interim CFO Jerry Cheatham .

Q&A Highlights

  • Volume mix detail: Consumer organic +~4%; U.S. metals strong (aerosol +~25%, food cans +~10%); EMEA metals volumes down single digits but EBITDA up ~25% YoY; industrial volumes low single-digit down, Europe softer than expected .
  • Synergies and team retention: Raised 2025 synergy run-rate to ~$40M; confident in achieving $100M by end-2026; leadership retention and engagement strong .
  • Leverage trajectory: Net leverage <4x after TFP paydown; target 3.0–3.3x by end-2026; year-end 2025 expected “on the 4x” .
  • Pricing/cost: OCC assumptions ~$80–$85 in 1H, ~$90–$95 in 2H; URB price increase implementation progressing with contract timing, expecting 2H margin benefit; each $10 index move ≈ ~$6M annualized revenue .
  • Macro/tariffs: No major supply chain changes observed; portfolio skew to consumer food packaging expected to be resilient; messaging focus on transformation and valuation .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $1.41* estimate vs $1.38 actual (Miss); revenue $2.040B* estimate vs $1.709B actual (Miss) .
  • EBITDA context: SPGI “EBITDA actual” for Q1 2025 was 290.3* vs company’s adjusted EBITDA $337.8M; the difference reflects SPGI’s definition vs Sonoco’s non-GAAP adjustments (restructuring, amortization of intangibles, acquisition/divestiture costs, etc.) .
  • Implications: Street models may need to recalibrate revenue expectations for combined portfolio seasonality and discontinued ops treatment, while maintaining margin expansion assumptions tied to price/cost, synergies, and 2H URB implementation. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Eviosys integration is tracking ahead on synergies (~$40M in 2025, $100M by 2026), supporting margin expansion and multi-year earnings compounding .
  • URB price actions and lower OCC in 1H set up a constructive 2H margin profile in Industrial; watch index timing to gauge realized impact .
  • Revenue miss vs consensus highlights the need to reset Street expectations for seasonality and discontinued operations; focus on adjusted EBITDA growth and cash generation .
  • Balance sheet de-risking continues: net leverage <4x post-TFP sale; path to 3.0–3.3x by end-2026 remains intact, preserving flexibility .
  • Dividend increased to $0.53; 100 years of uninterrupted dividends supports total-return profile amid deleveraging and integration .
  • Near-term: Stock may trade on synergy delivery updates, 2Q/3Q volume cadence in metals, and confirmation of URB index moves; monitor FX and interest expense .
  • Medium-term: Thesis anchored on a simpler, consumer-heavy portfolio with rising productivity, structural synergies, and disciplined capital allocation; guidance reaffirmation underscores confidence despite macro uncertainty .