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Sonoco Products (SON) 1 Nov 24 2024 Q3 Earnings call transcript

AInvestFriday, Nov 1, 2024 7:48 pm ET
1min read

Sonoco Products Company held its third quarter earnings call, highlighting its financial performance and strategic initiatives. The call was led by CEO Howard Coker, CFO Robert Dillard, COO Rodger Fuller, and Vice President of Investor Relations Lisa Weeks. The call provided insight into the company's operational and financial health, as well as its strategic direction moving forward.

Financial Highlights

Sonoco reported a strong third quarter, with sales at $1.68 billion and adjusted EBITDA of $281 million, reflecting a 16.8% margin. The company's adjusted earnings per share were $1.49, while operating cash flow stood at $162 million. Industrial volumes were flat year-over-year, but industrial price cost impacts remained a challenge. Consumer volumes were higher in Metal Packaging, but lower in Bridger paper can volumes.

Strategic Priorities

Sonoco's strategic priorities include portfolio simplification, cost optimization, and innovation. The company is in the process of closing one paper mill and three paper converting operations in China, and has announced the acquisition of Eviosys to scale its strategic metal packaging platform. The acquisition is expected to be immediately accretive to earnings and cash flow.

The company also announced a review of strategic alternatives for its thermoformed and flexible packaging business, with plans to finance the acquisition with debt and cash. The goal is to simplify the portfolio, improve leverage, and align value-creating capital investments to the highest return opportunities.

Operational Challenges

The call also highlighted operational challenges faced by the company, including hurricanes Elaine and Milton, which caused supply chain disruptions and forced the shutdown of operations in affected areas. The company, however, maintained a focus on caring for its employees and delivering products for customers.

Market Outlook

Looking ahead, Sonoco expects consumer volumes to grow low single digits in Q4, while industrial volumes are expected to remain flat. Price trends are expected to improve, but price cost remains negative in Q4. The company is also reviewing strategic alternatives for its thermoformed and flexible packaging business, with plans to divest it in the near future.

Conclusion

Sonoco's third quarter earnings call provided a comprehensive overview of the company's financial performance and strategic direction. The company's focus on portfolio simplification, cost optimization, and innovation, coupled with its operational resilience in the face of challenges, positions it well for future growth. The acquisition of Eviosys and the strategic review of its thermoformed and flexible packaging business are key initiatives that are expected to drive growth and create value for shareholders. Overall, Sonoco's earnings call underscored its commitment to delivering strong financial results and driving long-term value for its stakeholders.

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