SON · Sonoco Products Company

Sonoco Products Company reported first quarter 2026 results with net sales of $1.7 billion, down 1.9% year-over-year, primarily due to the November 2025 divestiture of the ThermoSafe business, partially offset by higher prices to combat inflation and tariffs, and favorable foreign exchange. GAAP operating profit remained flat at $127.1 million, supported by productivity savings, fixed cost reductions, and a positive price/cost environment, despite lower volumes and the absence of divested business profits. Adjusted operating profit declined 5.6% to $200.8 million and adjusted EBITDA fell 18.1% to $276.5 million. GAAP net income rose 24.2% to $67.6 million, driven by a lower effective tax rate of 12.4% versus 30.9% last year, while adjusted net income decreased 12.8% to $119.4 million, with adjusted diluted EPS at $1.20, down 13.0%.

Segment performance was mixed: Consumer Packaging net sales increased 2.9% to $1,097 million on price hikes, though operating profit margins contracted to 11.5% from softer volumes partially offset by productivity. Industrial Paper Packaging sales dipped 1.4% to $579 million, with margins down to 12.0% due to lower volume/mix and losses from a fire at a South Carolina recycling facility. Management highlighted solid execution amid winter weather disruptions, a facility fire, and macroeconomic pressures, with the Profitability Performance Plan delivering $8 million in recurring savings, targeting $32 million annually and $150-200 million over three years.

Balance sheet showed cash at $224 million and net debt at $4.5 billion as of March 29, 2026, with operating cash use of $368 million due to $103 million in one-time taxes on 2025 divestiture gains and seasonal working capital needs. Guidance for full-year 2026 net sales ($7.25-7.75 billion), adjusted EBITDA ($1.25-1.35 billion), and operating cash flow ($700-800 million) remains unchanged, but adjusted EPS is now targeted at the low end of $5.80-6.20 amid inflation in energy, logistics, and resins, plus demand uncertainty from geopolitical factors. Strategic investments include a new Thailand paper can facility for Asia's stacked chip market and $20 million for wood reel capacity in Alabama to support AI data center infrastructure.