Sonoco Products Q3 Earnings Call Highlights

Key Points

• Q3 performance weakened: Sonoco reported $2 billion in sales, down 4% year over year, while adjusted EBITDA fell 9% to $352 million and adjusted EPS declined 13% to $1.67. Results were pressured by higher input and freight costs, weather-related food-can demand weakness and an $829 million non-cash goodwill impairment.
• Industrial demand remained resilient, with sales up 5% to $646 million and URB volumes increasing, while the Consumer segment declined 3% as drought and heat reduced crop yields and food-can volumes. Productivity initiatives generated $16 million in quarterly savings, and European site closures are expected to deliver $15 million-$20 million of annual savings in 2027.
• Sonoco reduced debt and maintained its 2026 outlook, cutting total debt by $162 million and refinancing an $800 million term loan. The company expects full-year sales of $7.2 billion-$7.4 billion, adjusted EBITDA of $1.2 billion-$1.25 billion, adjusted EPS of $5.30-$5.50 and operating cash flow of $600 million-$650 million.

Sonoco Products NYSE: SON reported third-quarter 2026 results that reflected higher input and freight costs, weather-related weakness in food-can demand and continued productivity gains. The company also reduced debt, refinanced an $800 million term loan and updated its full-year outlook.

Net sales totaled $2 billion, down 4% from a year earlier. Excluding the 2025 divestiture of ThermoSafe, sales were essentially flat, Chief Financial Officer Paul Joachimczyk said. Adjusted EBITDA was $352 million, down 9% year over year, or down 4% excluding ThermoSafe, while adjusted earnings per share fell 13% to $1.67, or 7% excluding the divested business.

The company recorded an $829 million non-cash goodwill impairment during the quarter, primarily related to its consumer EMEA business. Joachimczyk said the impairment resulted from the company’s annual goodwill-testing process and reflected current market conditions and business performance. He said it did not affect adjusted results or alter Sonoco’s long-term strategy for the business.

Industrial demand remained resilient

Sonoco’s Industrial segment posted a 5% sales increase to $646 million, supported by pricing and demand for uncoated recycled paperboard, or URB. North American URB trade-ton sales rose 10% year over year, while global trade-ton sales increased 6%. Mill utilization remained strong, with U.S. operating rates in the mid-90% range entering the fourth quarter.

Chief Executive Officer Howard Coker said wire and cable reel sales recorded double-digit growth, aided by capacity investments, wood demand and broader infrastructure activity. He said the company expects similar growth rates in the reels business during 2027, though data-center construction has not yet been a major contributor to demand.

Industrial adjusted EBITDA declined 5% year over year as higher costs for old corrugated containers, freight and diesel outpaced price recovery during the quarter. OCC, Sonoco’s largest industrial raw-material input, increased another $25 per ton during the quarter and was 90% higher than a year earlier. Total URB production costs rose more than $60 per ton year over year.

Sonoco implemented two Industrial price increases during 2026 totaling $110 per ton. Coker said the second increase was implemented late in the third quarter, meaning some benefits should be realized in the fourth quarter, with the full impact expected to be reflected in 2027. Management said it currently expects OCC costs to remain flat in the fourth quarter.

Consumer results pressured by weather and costs

Consumer segment sales declined 3% year over year, including a 1% foreign-exchange impact tied largely to euro movements. Volume mix declined 3%, primarily because drought, high temperatures and other weather events affected crop yields and reduced food-can demand in North America and Europe.

Consumer EBITDA declined 9% in the quarter. The company cited softer global metal food-can volumes and unfavorable price-cost relationships, although certain parts of the portfolio showed growth. International paper-can operations generated double-digit volume growth, U.S. aerosol-can demand increased 7%, and canned seafood volumes improved. Canned seafood now represents about 10% of Sonoco’s consumer portfolio, according to management.

Joachimczyk said the company views the food-can weakness as largely seasonal and related to the harvest rather than a structural demand shift. Management expects consumer volumes to be roughly flat year over year in the fourth quarter, while Industrial volumes are expected to rise slightly.

In August, Sonoco combined its can businesses into one global consumer packaging segment with operations in the Americas, EMEA and Asia-Pacific. Ernest Haynes was named president of the approximately $5 billion segment. Coker said the change is intended to improve coordination across operations, technology, procurement, supply chain and commercial execution.

The company is also closing two European sites as part of a footprint optimization effort. Sonoco expects those actions to generate $15 million to $20 million of savings in 2027.

Productivity program and cash flow

Sonoco’s Profitability Performance Plan, or PPP, generated $16 million of savings in the third quarter, up from $10 million in the second quarter and $8 million in the first quarter. Year-to-date savings reached $34 million, with annualized savings at $51 million.

The three-year program targets $150 million to $200 million in savings through structural margin improvements, organizational simplification and commercial initiatives. Joachimczyk said Sonoco is targeting approximately $50 million of savings in 2026, followed by a higher contribution in 2027 and another increase in 2028. The company is targeting savings in the range of $180 million over the program’s duration.

Management said productivity and cost actions offset roughly $24 million of an estimated $40 million to $50 million combined impact from inflation and lower volumes during the third quarter. Freight expense alone rose $17 million from the prior-year period, while U.S. diesel prices climbed above $6.50 per gallon, according to Coker.

Operating cash flow was $285 million in the quarter despite seasonal working-capital headwinds. Sonoco reduced total debt by $162 million and net debt by $176 million, while refinancing an $800 million term loan. Joachimczyk said the refinancing is expected to have an immaterial $2 million to $3 million effect on interest expense next year while extending maturities beyond 2027.

Updated 2026 outlook

For full-year 2026, Sonoco now expects:

• Net sales of $7.2 billion to $7.4 billion;
• Adjusted EBITDA of $1.2 billion to $1.25 billion;
• Adjusted EPS of $5.30 to $5.50; and
• Operating cash flow of $600 million to $650 million.

Coker said the fourth-quarter outlook remains subject to uncertainty surrounding inflation, the holiday period and broader macroeconomic conditions. Still, he said the company remains confident in its Industrial demand trends, consumer innovation pipeline, pricing actions and long-term strategy.

About Sonoco Products (NYSE:SON)

Sonoco Products Company is a global packaging company headquartered in Hartsville, South Carolina. Founded in 1899 as the Southern Novelty Company, it has developed from a producer of paper cones for the textile industry into a diversified provider of packaging solutions serving consumer, industrial and commercial customers.

The company manufactures a broad range of products, including composite cans and tubes, paperboard packaging, flexible packaging, thermoformed packaging, rigid plastic containers, protective packaging and packaging components.

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