Sonoco Reports 4Q, Full Year 2023 Results

Sonoco Products Company reported financial results for its fourth quarter and fiscal year ended Dec. 31, 2023.

Summary
• Achieved second best full year results for adjusted EPS in the Company’s 125-year history
• Generated a record $883 million of operating cash flow and $600 million of free cash flow in the full year of 2023
• Invested a record level of capital in the business for future growth and productivity
• Achieved record results in operating profit and adjusted EBITDA in flexible packaging and record net sales in rigid paper containers in the Consumer Packaging segment
• Produced record operating profit margins and adjusted EBITDA margins in Industrial Paper Packaging segment despite a low volume environment
• Expanded the company’s flexible packaging capabilities with the acquisition of Inapel Embalagens Ltda. in Brazil
• Solid fourth quarter operating results driven by strong productivity offset by higher employee expenses, healthcare, and accounts receivable reserve
• Effective Jan. 1, 2024, Sonoco integrated the flexible packaging and thermoforming packaging businesses within the Consumer segment to streamline operations, enhance customer service, and better position the business to accelerate growth

Q4 2023 (versus Q4 2022):
• Net sales decreased 2% to $1.6 billion driven by lower volumes and pricing
• GAAP operating profit increased to $135 million due to lower acquisition and restructuring costs, favorable productivity, and revenue from acquisitions
• GAAP net income decreased to $81 million for GAAP EPS (diluted) of $0.82
• Adjusted earnings decreased to $101 million for Adjusted EPS (diluted) of $1.02
• Adjusted operating profit and adjusted EBITDA decreased to $167 million and $236 million, respectively, due to lower volumes across the portfolio, unfavorable price/cost in Industrial, higher employee expenses, and higher accounts receivable reserve, which were partially offset by higher productivity and favorable price/cost in Consumer division.

2023 (versus 2022):
• Net sales decreased 6% year-over-year to $6.8 billion driven by lower volumes across the portfolio, partially offset by revenue from acquisitions
• GAAP operating profit increased to $716 million due to gains on divestitures and asset sales, lower acquisition and restructuring costs, favorable productivity, and revenue from acquisitions
• Effective tax rates on GAAP and adjusted earnings for the full year 2023 were 24.3% and 24.6%, respectively, compared with 20.7% and 23.9%, respectively, in the prior year
• Adjusted operating profit decreased to $804 million as lower overall volumes and unfavorable metal price overlap were partially offset by favorable productivity and revenue from acquisitions

“In 2023, Sonoco made further progress on our strategic initiatives and delivered solid financial results in a challenging macroeconomic environment,” said Howard Coker, president and CEO.

“We achieved the second-best year of financial results in our 125-year history,” Coker observed. “Our multi-year focus on improving and leveraging the operating model combined with our capital allocation strategy resulted in record productivity. We advanced our strategy by strengthening our portfolio with the addition of accretive acquisitions in our core businesses, and successfully divesting non-core assets.

“We generated record annual operating cash flow of $883 million and free cash flow of over $600 million,” Coker continued. “We remained focused on disciplined capital allocation and a strong balance sheet, and were pleased to increase our annual dividend for the 40th straight year. I am extremely proud of the hard-working Sonoco team members who remain focused on delivering value for our customers and executing initiatives to support the company’s continued success in the future.”

Balance Sheet and Cash Flow Highlights

• Cash and cash equivalents were $152 million as of Dec. 31, 2023, compared to $227 million as of December 31, 2022.
• Total debt was $3.1 billion as of Dec. 31, 2023, a decrease of $139 million from December 31, 2022.
• Cash flow from operating activities for the year ended 2023 was $883 million, compared to $509 million in the same period of 2022.
• Free cash flow in 2023 was $600 million compared to $190 million in 2022.