Sign in

You're signed outSign in or to get full access.

SP

SONOCO PRODUCTS CO (SON)·Q3 2025 Earnings Summary

Executive Summary

  • Net sales rose 57% year over year to $2.131B on Eviosys integration and pricing, with adjusted EBITDA up 37% to $386.4M and adjusted EPS up 29% to $1.92 .
  • Results were broadly in line with consensus: adjusted EPS $1.92 vs $1.93*, revenue $2.131B vs $2.153B*, EBITDA $386.4M vs $386.4M*; variances were negligible (S&P Global).
  • Guidance was lowered: FY25 adjusted EPS to $5.65–$5.75 (from ~$6.00), operating cash flow to $700–$750M (from ~$800M), while FY25 adjusted EBITDA was narrowed to $1.30–$1.35B (vs $1.30–$1.40B) .
  • Strategic catalyst: signed agreement to sell ThermoSafe for up to $725M; proceeds expected to reduce leverage and simplify to two core segments (Consumer and Industrial) .

What Went Well and What Went Wrong

What Went Well

  • Strong operational execution: “record top-line and bottom-line performance along with margin expansion despite challenging market conditions” — CEO Howard Coker .
  • Consumer segment strength: net sales +117% to $1.438B; adjusted EBITDA +112% to $260M; supported by Metal Packaging EMEA and U.S. metal packaging performance .
  • Industrial segment margin expansion: operating margin to 15% (+336 bps YoY) and adjusted EBITDA margin to 21% (+359 bps YoY) on price recovery and productivity/fixed cost reductions .

What Went Wrong

  • Macro softness in EMEA and product mix headwinds: management cited continuing volume weakness expected in Q4, particularly in Metal Packaging and Industrial EMEA .
  • Specific demand issues: EMEA seafood shortfall (Morocco sardines; Ghana tuna) and customer inventory caution leading to weaker Q4 volumes .
  • Higher interest expense weighed on results and outlook; CFO flagged Q4 interest expense around ~$50M and focus on debt reduction with ThermoSafe proceeds .

Financial Results

Consolidated Trends (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Billions)$1.709 $1.910 $2.131
GAAP Diluted EPS ($)$0.55 $4.96 $1.23
Adjusted Diluted EPS ($)$1.38 $1.37 $1.92
Adjusted EBITDA ($USD Millions)$337.8 $327.9 $386.4

Q3 2025 vs prior year and vs estimates

MetricQ3 2024Q2 2025Q3 2025 ActualQ3 2025 Consensus
Net Sales ($USD Billions)$1.355 $1.910 $2.131 $2.153*
Adjusted Diluted EPS ($)$1.49 $1.37 $1.92 $1.93*
Adjusted EBITDA ($USD Millions)$281.5 $327.9 $386.4 $386.4M*

Values marked with * retrieved from S&P Global.

Segment Breakdown (Q3 2025 vs Q3 2024)

SegmentNet Sales ($USD Millions)Segment Operating Profit ($USD Millions)Segment Adjusted EBITDA ($USD Millions)Segment Operating Margin (%)Segment Adjusted EBITDA Margin (%)
Consumer$1,438 vs $662 $209 vs $96 $260 vs $122 15% vs 15% 18% vs 18%
Industrial$585 vs $585 $90 vs $70 $123 vs $102 15% vs 12% 21% vs 17%
All Other$108 vs $107 $18 vs $17 $21 vs $20 17% vs 16% 19% vs 19%

KPIs (Q3 2025)

KPIValue
Cash & Equivalents$245.9M
Total Debt / Net Debt$5.2B / $4.9B
Available Liquidity$1,405M
Operating Cash Flow (quarter / YTD)$292M / $277M
Capital Expenditure (YTD)$248M
Free Cash Flow (YTD)$28.6M
Dividends Paid (YTD)$156M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY2025~$6.00 $5.65–$5.75 Lowered
Adjusted EBITDAFY2025$1.30B–$1.40B $1.30B–$1.35B Narrowed/maintained low end
Operating Cash FlowFY2025~$800M $700M–$750M Lowered
DividendQ4 2025$0.53 declared; record Nov 10; pay Dec 10 $0.53 (same) Maintained

Management also noted net sales outlook of $7.8–$7.9B in prepared remarks .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Portfolio simplification (TFP/ThermoSafe divestitures)TFP sale closed; leverage reduction underway ThermoSafe sale agreement up to $725M; proceeds to debt reduction; simplify to two segments Accelerating simplification
Industrial marginsQ1: +~200 bps; focus on operational excellence Q3: adj. EBITDA margin 21% (+359 bps YoY); price recovery/productivity Improving
EMEA demand/mixQ2: integration progress, synergy targets; strong U.S. metal cans Q3: seafood shortfall (Morocco sardines) and customer inventory caution; weaker Q4 volumes Near-term pressure
Working capital seasonalityH1 OCF outflows; expected reversal in H2 Q3 OCF $292M; expect reversal to continue in Q4 Improving in Q4
Interest expenseHigher-than-expected costs cited Q4 interest expense guided ~ $50M; expect reduction post ThermoSafe debt paydown Moderating post-deleveraging
Rigid Paper Containers (RPC)New all-paper packaging initiatives Temporary issue with major customer; reacceleration expected as situation resolves Near-term dip, medium-term recovery

Management Commentary

  • “Our Consumer Packaging segment sales and operating profit each grew 117% and adjusted EBITDA increased by 112%... Most of the improvement came from the addition of Metal Packaging EMEA and improved results from our Metal Packaging U.S. business.” — CEO Howard Coker .
  • “We generated $292 million in operating cash flow in the quarter which was up 80% over the prior year period due to solid improvement in working capital.” — CFO Paul Joachimczyk .
  • “Third quarter [EMEA] results modestly improved… but business activity was below our expectations due to macroeconomic headwinds and weaker than anticipated seafood availability… we believe the fourth quarter will likely be weaker than we had anticipated.” — Roger Fuller (COO; Interim CEO Metal Packaging EMEA) .
  • “We are adjusting full-year earnings guidance in anticipation of continuing volume weakness in the fourth quarter… We are implementing targeted restructuring activities… to generate strong cash flow.” — CFO Paul Joachimczyk .

Q&A Highlights

  • EMEA volume drivers: seasonal veg pack in-line; shortfalls in Morocco sardines and Ghana tuna; customers managing inventories tightly → weaker Q4 guide .
  • Footprint optimization: actions in Africa and France; aligning cost base with demand; building commercial capabilities; targeting $100M synergy run-rate by end of 2026 (approx. $40M by end of 2025; conservatively ~$30M realized in 2026) .
  • Interest expense: Q4 expected around ~$50M; debt repayment prioritized with ThermoSafe proceeds to lower future interest costs .
  • RPC trajectory: temporary headwind with a major customer; management expects reacceleration as inventories normalize and new projects ramp .
  • Industrial network actions: closed 25k tpy URB machine in Mexico City to keep operating rates in the 90s and improve cost profile/logistics .

Estimates Context

  • Q3 2025: Adjusted EPS $1.92 vs $1.93*; Revenue $2.131B vs $2.153B*; EBITDA $386.4M vs $386.4M* — essentially in line with minor misses on revenue/EPS; limited estimate reset likely centers on weaker Q4 EMEA volumes and lower FY EPS/OCF guidance .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Sonoco delivered broad-based margin expansion and record adjusted EBITDA in Q3 while integrating Eviosys; Industrial margins are structurally higher than historical levels, supported by price discipline and productivity actions .
  • Guidance reset is concentrated in EMEA volume softness and mix; monitor Q4 demand cadence and 2026 synergy realization path for inflection timing .
  • Deleveraging remains a core capital priority; ThermoSafe proceeds (up to $725M) should reduce leverage and interest expense, enhancing balance sheet resiliency .
  • Consumer metal cans: U.S. food can volumes up (5% in Q3) with share wins; EMEA taking actions to diversify into pet food/seafood and optimize footprint — supportive of medium-term mix improvements .
  • Working capital reversal is underway; Q3 OCF of $292M and expected Q4 strength support FY25 cash flow range despite lowered guidance .
  • Dividend continuity remains strong (402nd consecutive quarter; $0.53/share for December), underpinning shareholder return while leverage declines .
  • Watch for Investor Day (Feb 17, 2026) roadmap on three-year growth, synergy capture (~$100M run-rate by end-2026), and capital allocation, which can be catalysts for re-rating .