11.03.23
Sonoco Products Company reported financial results for its third quarter ended Oct. 1, 2023.
In 3Q 2023, net sales decreased to $1.7 billion driven by lower volumes and average selling prices. GAAP operating profit decreased to $163 million due to lower overall volume and mix and price/cost, partially offset by higher productivity. Sonoco achieved net income margin of 7.6% and adjusted EBITDA margin of 16.4%.
GAAP net income increased to $131 million for GAAP EPS (diluted) of $1.32. Adjusted earnings decreased to $145 million for adjusted EPS (diluted) of $1.46. Adjusted operating profit and adjusted EBITDA declined to $213 million and $280 million, respectively, due to lower overall volume and mix and price/cost, partially offset by higher productivity.
Sonoco continued near record results in the flexible packaging and the rigid paper container businesses in the Consumer Packaging and Industrial Paper Packaging segments. Inflationary pricing pressures continue to impact year-over-year demand in the Consumer segment.
Sonoco generated $617 million of operating cash flow in the first nine months of 2023 due to strong GAAP Net Income and disciplined working capital management, and closed the previously announced acquisitions of the remaining equity interest in RTS Packaging LLC and a paper mill in Chattanooga, TN; integration is well underway.
“Our third-quarter results benefited from seasonally higher demand as well as better than expected productivity and cost management from our global team,” said Howard Coker, Sonoco’s president and CEO. “Consumer volumes were lower year over year, but were sequentially higher across the segment with the exception of metal aerosol cans, which were below our forecasts on persistent end market demand softness.
“In the Industrial segment, volumes were generally as expected,” added Coker. “We closed the RTS Packaging and Chattanooga mill acquisitions, and integration has progressed to plan. Despite the continued weak macroeconomic backdrop, we achieved strong profit margin and operating cash flow in the quarter.”
Total debt was $3,255 million as of Oct. 1, 2023, an increase of $33 million from Dec. 31, 2022. Cash flow from operating activities for the first nine months of 2023 was $617 million, compared to $322 million in the same period of 2022. Free cash flow for the first nine months of 2023 was $435 million.
“For the fourth quarter, we expect seasonally lower demand volumes and unfavorable index-based pricing impacts,” Coker concluded. “We are raising full year adjusted EPS and adjusted earnings guidance based on year-to-date results and our fourth quarter guidance. Additionally, we are expecting full year operating cash flow to be $850 - $900 million and free cash flow to be $600 - $690 million based on lower operating cash flow and lower capital expenses. We remain focused on supporting our customers, managing expenses, and continuous improvement programs as we exit the year.”
In 3Q 2023, net sales decreased to $1.7 billion driven by lower volumes and average selling prices. GAAP operating profit decreased to $163 million due to lower overall volume and mix and price/cost, partially offset by higher productivity. Sonoco achieved net income margin of 7.6% and adjusted EBITDA margin of 16.4%.
GAAP net income increased to $131 million for GAAP EPS (diluted) of $1.32. Adjusted earnings decreased to $145 million for adjusted EPS (diluted) of $1.46. Adjusted operating profit and adjusted EBITDA declined to $213 million and $280 million, respectively, due to lower overall volume and mix and price/cost, partially offset by higher productivity.
Sonoco continued near record results in the flexible packaging and the rigid paper container businesses in the Consumer Packaging and Industrial Paper Packaging segments. Inflationary pricing pressures continue to impact year-over-year demand in the Consumer segment.
Sonoco generated $617 million of operating cash flow in the first nine months of 2023 due to strong GAAP Net Income and disciplined working capital management, and closed the previously announced acquisitions of the remaining equity interest in RTS Packaging LLC and a paper mill in Chattanooga, TN; integration is well underway.
“Our third-quarter results benefited from seasonally higher demand as well as better than expected productivity and cost management from our global team,” said Howard Coker, Sonoco’s president and CEO. “Consumer volumes were lower year over year, but were sequentially higher across the segment with the exception of metal aerosol cans, which were below our forecasts on persistent end market demand softness.
“In the Industrial segment, volumes were generally as expected,” added Coker. “We closed the RTS Packaging and Chattanooga mill acquisitions, and integration has progressed to plan. Despite the continued weak macroeconomic backdrop, we achieved strong profit margin and operating cash flow in the quarter.”
Total debt was $3,255 million as of Oct. 1, 2023, an increase of $33 million from Dec. 31, 2022. Cash flow from operating activities for the first nine months of 2023 was $617 million, compared to $322 million in the same period of 2022. Free cash flow for the first nine months of 2023 was $435 million.
“For the fourth quarter, we expect seasonally lower demand volumes and unfavorable index-based pricing impacts,” Coker concluded. “We are raising full year adjusted EPS and adjusted earnings guidance based on year-to-date results and our fourth quarter guidance. Additionally, we are expecting full year operating cash flow to be $850 - $900 million and free cash flow to be $600 - $690 million based on lower operating cash flow and lower capital expenses. We remain focused on supporting our customers, managing expenses, and continuous improvement programs as we exit the year.”