SONOCO PRODUCTS CO Q1 FY2025 earnings call

• Completed the sale of the thermoform and flexible TOPPAN Holdings, receiving ~$1.8 billion in cash and using proceeds to reduce debt.
• Completed first phase of Eviosys integration, rebranding as Sonoco Metal Packaging EMEA, with expectations of achieving ~$40 million in 2025 synergy savings toward a $100 million two-year target.
• Adjusted EPS was $1.38, up 23% year-over-year. Net sales were $1.7 billion, up 31%, and adjusted EBITDA was $338 million, up 38% with a margin of 16.6%.
• Recognized by Newsweek as one of the most trustworthy companies and by USA TODAY as an America's climate leader.
• Priorities include minding core business performance, managing Metal Packaging EMEA integration, preparing for divestiture of temperature assured business, and communicating the value creation story.

Consumer Packaging: Net sales were up 83% due to the S&P EMEA acquisition and favorable volume mix. Adjusted EBITDA from continuing operations saw a remarkable 127% year-over-year increase, driven by acquisitions, favorable price cost dynamics, productivity gains, and positive volume mix. Global rigid paper containers sales were marginally up compared to the prior year, while domestic metal packaging achieved double-digit growth. Industrial Packaging: Sales decreased 6% to $558 million, impacted by lower volumes, planned exit of industrial operations in China, and unfavorable currency translation. However, adjusted EBITDA increased by $6 million to $101 million, with margins expanding 200 basis points year-over-year due to favorable price cost dynamics and productivity, offset by volume softness and currency. Other Businesses: All other sales were $85 million, and adjusted EBITDA was $14 million, affected by the divestiture of protective solutions and softness in key end markets.

• Reaffirmed full-year 2025 guidance: Adjusted EPS expected in the range of $6 to $6.20. Expect net sales to grow ~20% to nearly $8 billion, adjusted earnings ~20% growth, and adjusted EBITDA ~30% growth. Operating cash flow projected between $800 million to $900 million and free cash flow between $450 million to $550 million. OCC cost expected to average between $90 to $95 in the second half. URB price increase benefits expected in the second half.

• Potential impact of economic downturn and tariffs on performance.
• Volume softness in the industrial segment, particularly in Europe.
• Unfavorable currency translation effects.
• Discrete customer transitions affecting volume in certain regions.

Q: Color on volume performance by region and segment A: Consumer volume was mid-single digits globally. Rigid paper North America and South America were slightly up, while Europe and Southeast Asia were down (timing issue). Industrial volume was low single digits, with Europe softer than expected. Metal in North America had aerosol up ~25% and food can 10+%, Europe EBITDA up 25% but volume mid-single digits down (timing) Q: Changes in purchasing behavior, supply chain, customer promo due to tariffs/macro A: Not seeing major changes, but one discrete customer pulled back, expected to return. Need to better communicate the company's story Q: Global network opportunities for metal business A: Looking at optimal locations for easy open ends, non-easy open ends, components across Europe, Asia, U.S. to provide lowest cost solution Q: Eviosys transition, synergy guide, team retention A: EBITDA up 23% in 1Q, guide conservative due to comps. Synergies upped to $40M in 2025, $100M by 2026. Team retention good due to communication and Sonoco culture Q: Volume environment, ThermoSafe update A: Consumer volume expected to improve in second quarter. ThermoSafe decision by end of year, business performing solid Q: Leverage, OCC cost, URB price A: Net leverage under 4x, target 3x-3.3x by 2026. OCC cost expected $90-$95 in second half. URB price increase running at 92%-93% utilization, expecting index pickup Q: Consumer volumes organic, metal business breakdown A: Consumer organic volume ~4% up. Metal in North America food up ~10%, aerosol ~25%, Europe seasonal market not kicked in yet. No pre-buy activity seen