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SONOCO PRODUCTS CO (SON)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $1.363B (+2% YoY), GAAP EPS was $(0.44), and Adjusted EPS was $1.00; Adjusted EBITDA was $247M (+5% YoY). Excluding Eviosys acquisition impact, Adjusted EPS would have been $1.17, consistent with prior guidance ($1.15–$1.35) .
  • Consumer Packaging net sales rose 18% to $705M (Eviosys partial December sales), while Industrial net sales were $571M (-4% YoY) with margin expansion; company delivered $41M productivity in Q4 and $183M for 2024 .
  • FY2025 guidance: Adjusted EPS $6.00–$6.20 (maintained), operating cash flow raised to $800–$900M (from $750–$850M), Adjusted EBITDA $1.3–$1.4B; leverage targeted to 3.0x–3.3x Net Debt/Adjusted EBITDA by end-2026 .
  • Strategic catalysts: Closed Eviosys acquisition (Dec 4, 2024), signed definitive agreement to sell TFP for ~$1.8B; two-year $100M synergy target with Eviosys and intent to use divestiture proceeds and FCF to deleverage .

What Went Well and What Went Wrong

What Went Well

  • Productivity gains more than offset price/cost headwinds: “we benefited from strong productivity improvements that more than offset price/cost headwinds” (CEO) .
  • Adjusted EBITDA +5% YoY to $247M; segment margins improved (Industrial Adjusted EBITDA margin 18% in Q4 vs 15% prior year) .
  • Strong cash generation: operating cash flow $834M (second best in company history), Free Cash Flow $456M; record $378M growth/productivity capex in 2024 .
  • Metal packaging demand resilient: aerosol strength in paints and disinfectants; share gains and normalization post-COVID destocking (management Q&A) .

What Went Wrong

  • GAAP net loss $(43)M in Q4 driven by acquisition-related costs and euro remeasurement loss tied to Eviosys closing; interest expense elevated post financing .
  • Continued price/cost pressure across businesses; All Other net sales down 40% YoY due to Protexic sale and volume softness in temperature-assured packaging and industrial plastics .
  • Industrial weakness outside North America: softness in Europe (pricing competitive; capacity rationalization underway) and Asia; exited China operations; sequential improvement still needed .
  • Eviosys negative earnings contribution in December (primarily interest expense) and normal holiday slowdown, with synergies weighted more to 2026 due to late closing and CMA timing .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Billions)$1.623 $1.676 $1.363
GAAP EPS (Diluted, $)$0.92 $0.51 $(0.44)
Adjusted EPS (Diluted, $)$1.28 $1.49 $1.00
Adjusted EBITDA ($USD Millions)$262 $281 $247
Adjusted EBITDA Margin (%)16.2% 16.8% ~14.9% (includes discontinued ops; company stated “nearly 15%”)

Segment performance (Q4 2024 vs Q4 2023):

SegmentNet Sales ($USD Millions)Segment Operating Profit ($USD Millions)Segment Adjusted EBITDA ($USD Millions)Segment Adjusted EBITDA Margin (%)
Consumer Packaging$704.8 vs $596.7 (+18%) $66.0 vs $65.3 (+1%) $99.6 vs $91.3 (+9%) 14.1% vs 15.3%
Industrial Paper Packaging$570.6 vs $593.1 (-4%) $68.6 vs $61.5 (+12%) $102.1 vs $91.3 (+12%) 17.9% vs 15.4%
All Other$87.9 vs $146.0 (-40%) $5.1 vs $19.1 (-73%) $7.9 vs $22.7 (-65%) 9.0% vs 15.5%

Key KPIs and balance sheet:

KPIQ4 2024 / FY 2024 Value
Productivity Savings$41M in Q4; $183M in FY 2024
Operating Cash Flow$834M in FY 2024
Free Cash Flow$456M in FY 2024
Capital Expenditures$378M in FY 2024
Cash & Equivalents$443M at 12/31/2024
Total Debt$7.1B at 12/31/2024
Effective Tax RateGAAP: 36.6%; Adjusted: 24.8% (Q4)
Dividends Paid$203M in FY 2024

Notes: Company’s Adjusted EBITDA margin commentary (~15%) reflects total Company including discontinued operations; the reported Adjusted EBITDA table includes discontinued and separated net sales .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$6.00–$6.20 $6.00–$6.20 Maintained
Operating Cash FlowFY 2025$750–$850M $800–$900M Raised
Adjusted EBITDAFY 2025$1.3–$1.4B $1.3–$1.4B Maintained
Net Debt / Adjusted EBITDATarget by end-2026NA3.0x–3.3x New/Clarified
Dividend per ShareNext payableNA$0.52 declared for Mar 10, 2025 Maintained/declared
OCC (assumption)FY 2025NA~$100 average; effective tax rate ~25% Provided inputs

Earnings Call Themes & Trends

TopicQ2 2024 (Prior Q-2)Q3 2024 (Prior Q-1)Q4 2024 (Current)Trend
Productivity & Cost$51M Q2 productivity; ~100M 1H; focus on automation and footprint $39M Q3; continued gains; EBITDA margin 16.8% $41M Q4; $183M FY; 2025 base productivity ~$60–65M ex-flex/plastics; additional in Eviosys Sustained positive; moderation in 2025 base; upside with Eviosys integration
Metal Packaging demandAerosol & food cans positive; pack season ahead Aerosol strong; destocking fading; share gains Aerosols up (paints, disinfectants); flattish global food; potential upside if pack season strong Improving/normalizing post-COVID
Industrial geographyNorth America improving; balanced price/cost sought NA stable; Europe competitive; Asia weak; capacity actions (Greece, Indonesia, exit China) NA positive price/cost; EMEA/Asia weak; ongoing rightsizing Mixed; strength in NA; restructuring outside NA
Tariffs/supply chainMonitoring steel; strategic purchasing CMA approvals progressing; financing closed Tariff pass-through mechanisms; diversified supply chain; most sales outside U.S. Manageable with diversification and contracts
Portfolio strategyConsidering expanded divestitures; ROIC focus Eviosys closing imminent; TFP review; delever plan; ROIC target teens Eviosys closed; TFP sale signed; leverage 3.0–3.3x by 2026; ThermoSafe sale targeted 2025 Simplification accelerates; deleveraging path clearer
Sustainability & R&DAwards for Pringles paper can design; pipeline Sustainability innovations continue Continued investment across RPC, metal; global expansion projects (Thailand/Mexico/U.S.) Ongoing, supports growth

Management Commentary

  • “2024 was a milestone year for Sonoco… globally scale our metal packaging platform through the acquisition of Eviosys and… transform our portfolio…” (Howard Coker, CEO) .
  • “We intend to use proceeds from divestitures, along with projected strong free cash flow, to lower leverage to 3.0X to 3.3X Net Debt/Adjusted EBITDA by the end of 2026.” .
  • “Adjusted EPS excluding Eviosys… was within our expectations… driven by strong operational performance and fixed cost reduction initiatives.” (Interim CFO) .
  • “We are very confident in the $100 million synergy target to get to that run rate by the end of 2026… procurement and SG&A shared services across Europe.” (COO) .
  • “We have assembled quality assets and strong market position… adjusted EBITDA is expected to grow approximately 30% to between $1.3–$1.4 billion.” (CEO) .

Q&A Highlights

  • Eviosys contribution: ~$390M 2024 adjusted run-rate EBITDA; plan for ~10% increase in 2025; December 2024 loss mainly interest expense; synergies ~⅓ in 2025, remainder 2026 due to late close/CMA .
  • TFP: Q1 contribution similar to Q4 2024; sale process progressing; expected close by mid/late 2025; proceeds used to delever .
  • Industrial: Strong NA tube/core and URB; weakness in Europe/Asia; ongoing capacity rationalization; NA price/cost turned positive in Q4 and seen continuing .
  • Productivity outlook: Base productivity ~$60–$65M in 2025 (ex-flex/plastics), plus additional within Eviosys; balanced across Consumer/Industrial .
  • Tariffs & supply chain: Pass-through mechanisms and diversified supply mitigate U.S. tariff impacts; ~60% of business non-U.S. and locally supplied .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable at time of analysis due to provider limits; therefore, explicit “vs. estimates” comparisons cannot be provided. We anchored assessment to company guidance and reported results and would expect sell-side models to reflect higher FY2025 operating cash flow ($800–$900M) and maintaining EPS/EBITDA ranges following Q4 delivery and Eviosys integration commentary .
  • Where applicable, readers should compare the reported Q4 Adjusted EPS of $1.00 and Adjusted EBITDA of $247M to their preferred consensus sources once accessible .

Key Takeaways for Investors

  • Portfolio transformation is accelerating: Eviosys closed, TFP sale signed, ThermoSafe targeted, focusing capital on higher-ROIC metal and paper platforms; synergy run-rate $100M by end-2026 .
  • Solid operational execution: productivity consistently offsets price/cost pressure; Adjusted EBITDA margins resilient (Q4 ~15% including discontinued; Q3 16.8%) .
  • FY2025 outlook constructive: Adjusted EPS $6.00–$6.20, operating cash flow raised to $800–$900M, Adjusted EBITDA $1.3–$1.4B; strong free cash supports deleveraging to 3.0–3.3x by 2026 .
  • Industrial cycle mixed: North America improving with positive price/cost; Europe/Asia remain soft and undergoing footprint optimization—monitor progress through 2025 .
  • Metal packaging normalization: aerosol demand firm; food cans flattish globally with upside from pack season; integration of Eviosys should enhance procurement and SG&A efficiency .
  • Cash discipline and capital priorities: record capex channeled to value-adding growth/productivity; continued dividend strength ($0.52 declared) and long dividend streak underpin shareholder returns .
  • Near-term trading: raised cash flow guidance and clear deleveraging plan are positive catalysts; watch synergy ramp pacing and Europe/Asia industrial recovery as key sentiment drivers .