On July 31, 2024, Sonoco Products Co (SON, Financial) released its 8-K filing detailing its financial performance for the second quarter ended June 30, 2024. The company, a leading global provider of industrial and consumer packaging solutions, reported mixed results with earnings per share (EPS) surpassing analyst estimates but revenue falling short.
Company Overview
Over its 100-year-plus history, Sonoco Products Co (SON, Financial) has steadily assembled a diverse portfolio of industrial and consumer packaging product offerings such as flexible and rigid plastics, reels and spools, pallets, and composite cans. The company serves a variety of consumer and industrial end markets throughout North America and has raised its dividend each year for more than 40 years.
Performance and Challenges
Sonoco Products Co (SON, Financial) reported GAAP net income attributable to Sonoco of $91 million, Adjusted EBITDA of $262 million, diluted earnings per share of $0.92, and diluted Adjusted earnings per share of $1.28. While the EPS of $1.28 exceeded the analyst estimate of $1.12, the revenue of $1.62 billion fell short of the estimated $1.69 billion. The company faced a 5% decline in net sales primarily due to the divestiture of Protective Solutions, the closure of a thermoformed food packaging plant, and lower selling prices.
Financial Achievements
Despite the challenges, Sonoco Products Co (SON, Financial) achieved significant productivity gains of $51 million during the second quarter and $102 million in the first half of 2024. The company generated $275 million of operating cash flow and $96 million of Free Cash Flow during the first half of 2024. Additionally, Sonoco entered into an agreement to acquire Eviosys for approximately $3.9 billion, expected to be completed in the fourth quarter of 2024.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $1,623 million | $1,705 million | -5% |
| Operating Profit | $140 million | $188 million | -25% |
| Net Income Attributable to Sonoco | $91 million | $115 million | -21% |
| EPS (Diluted) | $0.92 | $1.16 | -21% |
Segment Performance
Sonoco Products Co (SON, Financial) reports its financial results in two segments: Consumer Packaging and Industrial Paper Packaging.
| Segment | Q2 2024 Net Sales | Q2 2023 Net Sales | Change |
|---|---|---|---|
| Consumer Packaging | $928 million | $971 million | -4% |
| Industrial Paper Packaging | $601 million | $585 million | 3% |
Balance Sheet and Cash Flow
As of June 30, 2024, Sonoco Products Co (SON, Financial) had cash and cash equivalents of $140 million and total debt of $3.0 billion. The company had available liquidity of $1.4 billion, including undrawn availability under its revolving credit facility. Cash flow from operating activities for the first half of 2024 was $275 million, compared to $349 million in the same period of 2023. Capital expenditures for the first six months of 2024 were $179 million, compared to $90 million for the same period last year.
Commentary and Outlook
"Sonoco delivered solid second quarter results with sequential growth in adjusted EBITDA and EPS," said Sonoco’s President and CEO, Howard Coker. "While the pace of Consumer volume recovery remains muted, we were pleased to see low single digit organic volume improvements in Industrials. Importantly, productivity was $51 million in the second quarter bringing our first half 2024 total to $102 million, well ahead of our full year outlook."
Sonoco Products Co (SON, Financial) reaffirmed its full-year 2024 guidance for Adjusted EBITDA, Adjusted EPS, and operating cash flow, excluding the effects of the pending Eviosys acquisition and potential divestitures. The company expects third-quarter 2024 Adjusted EPS to be in the range of $1.40 to $1.60 and full-year 2024 Adjusted EPS to be between $5.00 and $5.30.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Sonoco Products Co for further details.
