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Sonoco Products Company was founded in 1899 in Hartsville, South Carolina, originally as the Southern Novelty Company, and adopted the Sonoco name in 1923. Over more than a century, the company has grown from making paper cones for the textile industry into a global packaging leader serving consumer, industrial, and healthcare-related markets. The company operates globally, with around 22,000 employees, roughly 265 facilities in 37 countries.

Q2 2026

Q1 2026

Sonoco Products (SON): Company Profile, Stock Price, News, Rankings

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Sonoco Products

sonoco products

Thank you for standing by, and welcome to the Sonoco first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Roger Schrum, Head of Investor Relations and Global Marketing Communications. You may begin.

Thank you, Rob, and good morning, everyone. Last evening, we issued a news release and posted an investor presentation that reviews Sonoco's first quarter 2026 financial results. Both are posted on the investor relations section of our website at sonoco.com. A replay of today's conference call will be available on our website later today, and we'll post a transcript later this week. If you would turn to Slide 2, I would remind you that during today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations.

Further information about the company's use of non-GAAP financial measures, including definitions as well as reconciliations to GAAP measures, is available under the investor relations section of our website. Joining me today are Howard Coker, President and CEO, and Paul Joachimczyk, Chief Financial Officer. For today's call, we will provide prepared remarks followed by your questions. If you'll turn to Slide 4 in our presentation, I'll now turn the call over to Howard.

Thanks, Roger, and good morning, everyone. During our February Investor Day, we set out the framework for our focus strategy over the next three years, which is linked to our three priorities of sustainable growth, margin improvement, driven by our Profitability Performance Plan and efficient capital allocation, which is focused on investing in ourselves, debt reduction, and returning value to our shareholders. We made strides in each of these priorities in the first quarter while achieving a solid start to the year despite some significant headwinds. Paul will go through the numbers in more detail, but as shown on Slide 5, our adjusted earnings for the first quarter of $1.20 met our and consensus estimates. This performance was primarily driven by strong productivity savings, favorable price cost environment, and a successful start to our Profitability Performance Plan despite lower volume mix.

I was really proud of our team's performance in the first quarter, despite severe winter weather, which temporarily closed some of our customers and our operations, a fire that destroyed our recycling facility in Greenville, South Carolina, and the effects of rapidly changing macroeconomic conditions stemming from the Middle East conflict. Our Consumer Packaging segment exceeded our expectations during the quarter. Our Industrial Paper Packaging segment managed well through both operational and demand challenges. As I mentioned, severe winter weather disrupted several of our U.S. operations in late January, as well as some of our large consumer customers who faced power outages, some lasting over a week. February was a much better month from a volume perspective, but with the onset of the Middle East conflict, we began experiencing rapid input cost inflation in March, and as I mentioned, an unfortunate fire in our Greenville facility on March 24th.

Thankfully, no one was hurt, but it did lead to a one-time cost of $2 million within the quarter. As you would expect, we're not standing still in the face of these macroeconomic challenges. If you turn to Slide 6, I'll talk further about the steps we're taking to mitigate rising costs and ensure supply for our customers in this challenging inflationary environment. Energy and freight and other petrochemical-related input costs, such as resins, coatings, and other chemicals, represent approximately 10% of our annual sales, while the impact on the first quarter was under a few million dollars. Based on current estimates, we believe this inflation could add between $8 million-$10 million in additional costs in the second quarter. We are leveraging our global sourcing and supply assurance team to do all we can to help offset these rising costs.

That said, we must recover this inflation and have implemented a number of necessary price increases, including a $70 per ton uncoated recycled paperboard increase in the U.S. and an EUR 80 per ton increase in Europe, along with other pricing actions. These actions are showing traction in the market. Fastmarkets reported last Friday an initial $60 per ton increase in U.S. URB prices. Given our current backlogs and solid mill utilization rates entering April, we feel confident about the sustainability of our actions. As shown on Slide 7, we have purposefully shifted our mix to more resilient consumer-focused businesses, where today two-thirds of our sales are generated by our leadership positions in paper and metal cans. We're focused on affordable, center-of-the-store, staple food categories, which have historically remained resilient during periods of economic stress.

I'm happy that our recent portfolio work has substantially reduced our exposure to resin-based packaging. In 2023, we used approximately GBP 240 million of petroleum-based resins, while today, we use only about GBP 75 million, primarily in our industrial plastics business and our plastic cartridges for adhesives and sealants, where we do have recovery mechanisms in place. As it relates to our growth pillar, we recently opened a new paper can plant in Nong Yai, Thailand. As shown on Slide 8, Paul and I had the opportunity to participate in the grand opening with our team in Asia in March. This highly automated operation is expected to annually produce approximately 200 million units for the growing stacked chip markets in Asia, and is one of the reasons we saw a 6% lift in paper can volume in the region in the first quarter.

This plant was built to accommodate future capacity expansion, and we believe it could eventually become one of the largest global paper can operations over the next several years. In our industrial business, we are investing $20 million to add a new automated nailed wood reel production line at our Hartselle, Alabama facility. As shown on Slide 9, when this new line opens at the end of the second quarter, we expect it will increase our capacity by 15%, enable us to meet the needs of the fast-growing wire and cable industry, as it supplies the booming power infrastructure demand for AI center growth. I'll add that sales in our reels business were up 13% in the quarter. In addition to funding our growth, our disciplined capital allocation strategy remains focused on reducing debt and returning capital to shareholders.

As shown on Slide 10, last week, our board of directors authorized the 43rd consecutive annual increase of dividends to shareholders, raising the payout to $2.16 per share, which provides an annual yield of about 3.8%. Sonoco is one of only a few public companies that has paid dividends consecutively for more than 100 years. In summary, we had a good start to the year despite challenges, and we remain confident in our portfolio, our strategy, and ability to execute through economic cycles. With that, I'll turn it over to Paul.

Thank you, Howard. I'll walk you through our first quarter financial performance starting on Slide 11. With our portfolio transformation complete, we're entering the next phase defined by sustainable growth, margin improvement driven by our Profitability Performance Plan, and efficient capital allocation, which is focused on investing in ourselves, debt reduction, and returning value to our shareholders. Today, I'll cover our first quarter results and our early progress against the Profitability Performance Plan we laid out at Investor Day in February. Before I review the quarter, a quick note on comparability and some nuances related to the accounting treatment for our divestitures in 2025. TFP was divested on April 1st, 2025, and is reported as discontinued operations in last year's first quarter. ThermoSafe was divested on November 3rd, 2025, and was included in continuing operations in that same period. In 2026, neither TFP nor ThermoSafe is part of continuing operations.

As a result, all year-over-year comparisons I discuss for continuing operations with ThermoSafe included in the 2025 figures, and I'll highlight the differences where applicable. Net sales from continuing operations were $1.7 billion, down 2% year over year. Results reflect lower than expected volumes, weather impacts, as well as macroeconomic and geopolitical pressures weighed on both our supply chain and our customers. Those headwinds were partially offset by pricing actions and a foreign currency benefit, primarily from the euro. Also in the year-over-year comparison is ThermoSafe, which contributed $55 million of sales in the first quarter of 2025. Excluding ThermoSafe, our sales increased by approximately 1% versus the prior year. Adjusted EBITDA was $277 million, down 4% year over year, and margin was down approximately 35 basis points. The decline was driven by lower volumes and the absence of operating profit from the divested ThermoSafe business.

These impacts were partially offset by productivity initiatives, strong pricing realizations, early savings from our multiyear profitability programs, and favorable foreign exchange rates. Excluding ThermoSafe, Adjusted EBITDA would have been flat, reflecting strong cost containment from our profitability programs despite softer volumes. Overall, we're encouraged by how our continuing operations performed following last year's reorganization. On a consistent comparison basis, our key metrics are up year-over-year, reinforcing that we're building a more agile and resilient organization to navigate challenges as they arise. Now moving to Slide 12. Adjusted EBITDA for the quarter was $1.20, flat year-over-year. After excluding the impact of discontinued operations. The year-over-year results reflect the balance of a softer volume and the impact of divestitures offset by productivity gains, pricing, early profitability savings from our three-year program, a lower effective tax rate, and a favorable foreign currency.

If we go a little deeper into the bridge here, I'd like to walk you through the components of each bar. We'll start with the discontinued operations adjustment, which is a net impact of $0.18, led by the TFP divestiture, partially offset by interest. The divestiture of ThermoSafe represents a $0.07 decrease. Operational changes are down $0.08 due to the pressures on the top line due to the macroeconomic and geopolitical factors within the quarter, partially offset by operational productivity. Non-operational changes are up $0.09, led by FX, especially the euro, reduction of our debt, and tax benefits, which helped to offset several headwinds the business faced within the quarter. Profitability Performance drove $0.06 of improvement. I want to underscore the importance of what we're doing to drive margins for the rest of the year by controlling the controllables.

We're maintaining pricing discipline, accelerating productivity, advancing our Profitability Performance Plan, and tightly managing both our costs and our capital. While the macro environment remains uncertain, we remain committed to executing the long-term financial targets we shared at Investor Day. Turning to cash flow on Slide 13. Operating cash flow in the first quarter was a use of $368 million, consistent with normal seasonal patterns as we build inventories ahead of the canning season. Gross capital investment was $62 million, below our expectations. Given the current macro environment, we are actively monitoring capital spending to stay disciplined and meet our targets. The year-over-year decline in cash flows was primarily driven by approximately $140 million of higher tax payments. That includes $103 million related to capital gains from prior period divestitures, which will not repeat.

As discussed at Investor Day, we have a clear and disciplined approach to capital allocation that includes prioritizing high return projects, continuing to optimize working capital, especially inventory and payables, and preserving balance sheet flexibility by paying down debt while still supporting the long-term growth initiatives. Turning to Slide 14. Before I go deeper into the segment results, I want to share a brief disclosure related to our Consumer segment and a footnote we've included for this discussion. In first quarter of 2025, Consumer segment Adjusted EBITDA did not include $18 million of unallocated corporate costs. You can find these details in the earnings release table on page 20 of our press release dated April 21st, 2026. Now let's turn our attention to the two segments and overall results. Starting with Consumer.

Sales increased 3% year-over-year to $1.1 billion, driven by pricing and favorable foreign currency exchange rates, partially offset by volume and mix softness related to the macroeconomic conditions. Adjusted EBITDA from continuing operations declined 7%, reflecting lower volumes, partially offset by productivity initiatives, pricing actions, and early transformation savings. Adjusting for the 2025 unallocated corporate costs I just described, Consumer Adjusted EBITDA would've been up with margins flat. In Consumer, the team remains focused on price realization and mix discipline across key geographies while driving manufacturing and supply chain productivity. They are also leveraging accelerated transformation savings to improve their margins. Let's move on to our Industrial segment. Sales were $579 million, down year-over-year by 1%, driven by softer volumes, partially offset by favorable pricing and index-based resets with foreign currency benefits.

Adjusted EBITDA declined by $7 million to $100 million, a 7% decrease as lower volumes were partially mitigated by pricing resets and productivity improvements. EBITDA margin was lower year-over-year due to unfavorable volume and mix, along with losses attributed to a fire at a recycling facility in Greenville, South Carolina. The industrial segment is focused fully on capturing index-based pricing resets as they flow through, executing against cost and productivity initiatives already underway, and preserving margin discipline while managing demand variability. We've seen good progress throughout the current month, which supports our confidence as we move into the second quarter. Turning to Slide 15. We are pleased with the early progress of our three-year Profitability Performance Plan outlined at Investor Day. In the first quarter, we delivered $8 million of savings, progressing towards our $150 million-$200 million target.

These savings were primarily driven by structural transformation initiatives, which contributed $6 million along with $2 million from commercial excellence and operational improvement efforts. Importantly, these savings are already flowing through the P&L, reinforcing our confidence in the program's execution and durability. As they annualize, they represent approximately $32 million of recurring savings. Turning to guidance on Slide 16. We are maintaining our full year outlook while recognizing that continued macroeconomic and geopolitical uncertainty, particularly late in our quarter, creates a dynamic operating environment. We will continue to monitor inflation and demand trends closely. With that, let me walk you through our full year expectations. For the full year, we expect sales of $7.25 billion-$7.75 billion, Adjusted EBITDA of $1.25 billion-$1.35 billion, Adjusted EBITDA of $5.80-$6.20, with results expected to trend towards the lower end of the range.

While we are maintaining our Adjusted EBITDA outlook, EPS will not track EBITDA one for one because of the tighter EPS range of only $0.40. In the current environment, inflationary cost pressures and macro volatility will create a larger impact on EPS rather than EBITDA. Operating cash flow of $700-$800 million, inclusive of the $103 million of tax payments related to 2025 divestitures, which were paid in the first quarter. For the remainder of 2026, our mandate is clear. Deliver on our three-year strategy of focus by executing the Profitability Performance Plan, which is delivering $32 million of annualized savings in 2026. We have to offset volume pressures that we experienced in early 2026, and we are protecting our margins through disciplined pricing and productivity, strengthening our cash flow through working capital and disciplined capital spending.

We are more focused and have stronger execution levers than in recent years, building a higher quality earnings base and strengthening cash generation, even in a challenging demand environment. Let me turn the call back over to Howard for some closing comments.

Thanks, Paul. Let me close by, again, thanking our global team for successfully guiding us through these uncertain times during the first part of the year. The year started out fairly strong, but we were affected by winter weather in the Americas, losing two weeks of production from two of our major consumer customers in the Tennessee region. We also had mill and converting downtime at our mills and our customers throughout the region. We lost a facility to fire and other relatively one-off type issues, and of course, the impact of the Middle East conflict. In spite of these, we stayed focused on controls and long-term productivity to deliver well within our expectations. I think it's also important to note while uncertainty remains, there is concern how the rest of the year will unfold. However, April has shown thus far some encouraging signs.

As we enter the pack season, consumer EMEA is seeing early positive signs in the south. The tuna pack has been strong, and while we have not built expectation for a rebound in sardines, this market too is showing some promise for improvement. Salted snack volumes are increasing, which is typical in a World Cup year. We've seen necessary index-based price in North America in our industrial business, which will drive full benefit during Q3 with incremental help in Q2, and early but reasonable expectations for URB and converted products and announced prices in Europe. Our focus on our drive for $150 million-$200 million over the next three years is on pace and will only build as we go deeper into the year. The reality is we are in uncertain times. Things are changing on a daily basis.

We do have some catch up to deal with from the quick hit of inflation as we entered into Q2, and thus the cautionary tone in our EPS forecast. Let me close by saying how pleased I am we have made, over the past several years, the changes you all have seen. If we had not made the portfolio shift, we'd be living in a vastly different world. Without our simplification efforts, we would not be driving the level of SG&A and other savings noted today. We would be facing serious supply chain issues and a much larger degree of inflation impact and volume pressures. Again, thanks to our team as we continue to drive through this difficult operating environment, and certainly looking forward to any questions that you may have. I'll turn it back over to the operator.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question today comes from the line of George Staphos from Bank of America Securities. Your line is open.

Hi, everyone. Good morning. Thanks for the presentation. I guess I had three questions. I'll ask them in sequence and turn it over. Howard, first of all, Paul, could you discuss what the effect of the storms was in the first quarter from a percentage of volume standpoint? In other words, if you did not have the storms, what would volumes have been? And what kind of early run rate are you seeing on volumes in consumer and in industrial for the second quarter? Second point, we appreciate you calling out the inflation effect so far of $8-$10 million in 2Q. Is that a sequential impact from 1Q or year-on-year? And if costs stay where they're at right now, would that be the effect in 3Q or would it be a lesser effect?

The last question I had for you is can you talk to us about how you feel on your metal supply chain, both aluminum and steel? Are there any flashpoints we need to watch out against relative to the street or do you feel like you're pretty well situated as far as you can see for the rest of the year? Thank you.

Thanks, George. I'm going to let Paul cover. I don't have the direct, and I don't know if Paul does either, the full numbers in terms of the impact of the storm. What I would say on the metal side, which I will handle, is we have no issues, no concerns, not only in terms of supply chain, but we have fixed pricing through the year. Obviously, we've seen tariffs and other things that can impact, but based off of where we sit today, we're in good shape.

George, on the first question that you had around the storm effect, we did experience more declines in our consumer business in the Americas, primarily due to the weather that was out there with some of our CPGs being down, two of our largest customers being down for over a week. That did create, I'll call it, a larger impact disproportionately than our international businesses that are out there. I'll say the early run rates, though, that we're seeing is we're seeing some recovery back in the business, more so in our industrial businesses. We're seeing strengthening in those markets as mills are getting closer back to the 90% effective rates, run rates that are there. We're seeing some lift back in our consumer businesses, but still more focused in on the international side. The Americas are still lagging behind.

It did impact the volume pressures there for sure. Moving on to your second

Hey, Paul, let me just back you up there.

Just so I know it's early, but what kind of volume are you seeing up/down? Can you put a percentage on it in your key consumer or industrial categories?

Yeah, I would say internationally, say low single digits that were up there. Industrial in the same ballpark, too. As you know, March was impacted primarily because of all the uncertainties that are out there. We're starting to see the recovery of those flows coming in early part of the month. I'll say it's right now, if that trend continues, it'll be a nice quarter for us in Q2.

If I move on to your second question around the inflation impact, the $8 million-$10 million is what we have line of sight to for Q2. With our recovery mechanisms that we have in place, there is a little bit of a lag. I'd say right now our exposure for Q2 is the $8 million-$10 million. Obviously, if there's more macroeconomic effects, if there's something that happens with pricing pressures on our input costs, those could change to be greater in Q3 and Q4. We do think our recovery mechanisms will help cover and offset those in those future quarters that are there, we don't have full line of sight to what's going to happen in the macro world that's out there. Today we feel confident in our exposure for what Q2 is going to bear.

Say, if everything holds steady, those would not recur, and we could recover that by Q3 and Q4.

Your next question comes from the line of John Dunigan from Jefferies. Your line is open.

Thank you, Howard. Thank you, Paul. Really appreciate all the details. I wanted to start back on the cost inflation with the $8 million-$10 million. Can you walk us through some of those key buckets and, in particular, nat gas, electricity across U.S. and Europe, and how much of that you have hedged across your businesses? If we're thinking about the freight surcharges that you called out, is there any kind of lag to putting those through contractually? Maybe you can help us quantify how much of your contracts currently have those freight surcharge mechanisms contained in them. Thanks.

Yeah, John, I'll take the first part of that. The cost inflation, the breakdown of it, you go through your freight as your primary driver of that. That was the one that we experienced almost immediately. You saw rising fuel prices, primarily in the diesel aspect, come through. We do have recovery places and mechanisms out there. There is a lag related to those, call it roughly three weeks, four weeks of a time period that's out there to get that recovery back. You're exposed, let's just say a month to be simplistic out there. As far as all the other inputs that are out there, whether it's the resins, the energy and things like that, I'd say we do have some coverage on our hedging. We haven't gone out with exactly what that coverage is from a hedging. The eight to nine is inclusive.

It's net of that. That is an impact of us from already factoring into what we already have hedged and placed into programs. That's the impact that we'll experience in our P&L. Freight is primarily the largest impact for us.

Great. That's very helpful. Just on my follow-up, I just wanted to jump over to the cost savings. You called out the $8 million from the initiatives towards the $150-$200, but productivity in the quarter was pretty impressive. It was up $33 million year-over-year. Can you just walk us through the difference between those two figures and how we should think of the cadence through the rest of the year? That'd be helpful.

Yeah. John, that's a great question. Really what we're trying to do is we're trying to delineate productivity, which really is covering our inflationary impacts, things of that nature versus the Profitability Performance Plan. The Profitability Performance Plan, as we think about it, this is costs that are going to fall right to the bottom line, and they're going to be there every quarter on a go-forward basis. That's why we did the delineation this quarter more so, and we'll continue that going forward. We want to assure you that what we are delivering in those savings and that program of the $150 million-$200 million, that is something that you can bank on for us that's going to be there quarter, after quarter, after quarter, and it's going to be recurring.

Your next question comes from a line of Michael Roxland from Truist Securities. Your line is open.

Hi, guys. Thanks for taking my questions. This is Nico Buccioni on for Mike Roxland. Just to clarify on the inflationary impacts, does your current guide assume that $8-$10 million is the limit of the impact, or do you assume current conditions basically persist through the rest of the year rather than kind of improve?

Secondly, what do you think of your customers' and consumers' ability is to absorb price? How much do you think you can push before demand destruction might occur?

Yeah, I would say that's what we have visibility of at this point in time. I went to extra effort to point out that with the new portfolio, particularly, our key raw materials being steel on the consumer side, they're basically flat, contractually protected through the year. We do have the resin exposure I spoke to in my opening comments. That too has recovery mechanisms in it, and it varies from within the month to within the quarter. Will we see more? It's hard to say. Depends on what happened while we were talking during this call. Virtually just seems to be changing on an immediate basis. The point here is that, from a key raw materials perspective, we feel really good in terms of the position that we're in at this point in time. The customer impact, it's hard to say.

Being in staple food, all I can say is what we've seen historically. When, obviously the inflation being felt at retail is also showing up in QSR and other outlets as well. When wallets get tight, we historically have seen in our consumer business that volumes are not affected and in fact, in some cases, have improved as people shop in the grocery store, cook at home as opposed to going out. Hard to predict how that's going to go. Certainly would think that, while we're talking about the packaging side of things, that there's pressures on all raw materials associated with all food items. Really on all items going forward, and ultimately we'll see how that fares through the consumer.

Got it. Understood. Just quick follow-up. I think you mentioned a little softer URB volumes in 1Q, but a pickup more recently in April. What do you attribute that pickup to, and can you share where backlogs stand right now?

Yeah, we don't really track backlogs in URB, but what we're seeing is that Paul had noted roughly a 90%-91% operating rate here, which is our largest market in URB in North America. Frankly, there's a couple of things going on. The main is that we talked in Investor Day about new products and new markets that we're entering with URB that traditionally have been served by other grades of paper, some of which has been taken out of the market, the mill closures. We've been successful in converting saturating kraft. We've got our first customer and a line of customers in the funnel right now. That is really helping us to, as we look out into the quarter, go from the low 90s, well, still low 90s, but from 90 to 92-93 type operating rates as that volume starts flowing through the mill network.

Got it. Thank you very much. I'll turn it over.

Your next question comes from the line of Hillary Cacanando from Deutsche Bank. Your line is open.

Hi. Thank you for taking my question. Just regarding the softer volumes and inflationary pressures in the first quarter, could you just elaborate on which specific end markets or geographies underperformed expectations or outperformed expectations? Most notably, I know you talked a little bit about tuna pack and sardines, but if you could give a little more detail on other end markets.

Yeah. What I'd say, I'm really just talking the geography. If you go around the world, Paul already noted that consumer EMEA was a very low, well, low single digits off from a volume year over year. It was a bigger impact here in North America, and I don't think I want to get in, just from a confidentiality with customers, but our two largest customers on our paper can business lost seven, eight days during the winter storm. Now, we talked about that in February, and what would typically happen is we'd see them rush to make up that time, and enough time would be held in the quarter. Of course, five, seven days after our Investor Day, you wake up and find out on February 27th we bombed Iran.

We think they took the opportunity to bring inventories down, and we're starting to see now a bit of a pickup, and the expectation is the magnitude of what we saw in the first quarter will not repeat itself. In fact, they should be looking to make some of that up through the year.

Got it. Great. Thank you. Just to follow up, as we're three weeks into the second quarter, I know you said April picked up, but are you seeing any real discernible change in customer ordering patterns or conversations? Has anything really changed? I know you're forecasting weaker volumes, but just wanted to see if any discernible change in patterns.

Yeah, Hillary, this is Paul. Really no discernible patterns that are out there. We're seeing a slight uptick in the volume that's given us a little bit more confidence in our guide that's out there, but really nothing that I'd say you could lead anything to other than just a recovery from Q1.

Your next question comes from the line of Anthony Pettinari from Citi. Your line is open.

Good morning. Thanks for taking the question. This is actually Bryan Burgmeier on for Anthony. Maybe just focusing on consumer a little bit, volumes were down against a pretty tough comp from last year. Do you think we start to see some improvement in year-on-year volume growth, in 2Q and as we start to get into the back half, maybe from easy comps or ramping investments? Just any detail on maybe how that volume trend could develop in 2026 and consumer. Thanks.

Yeah. It's pretty hard to really nail it with the amount of uncertainty we have out there. What I would say is probably on our aerosol business here in North America, pretty tough comps coming up here in the summertime and somewhat of a discretionary spend you can do without. On the other side of that would be reflective of a consumer that more of an economic downturn situation. You could see that being a tougher comp. At the same time, as I said earlier, you would expect that the food side of the business, the center of the store, the drive to the supermarket as conditions toughen, that it would balance that, if not actually exceed that. Tough to say.

I mentioned earlier in Europe, the World Cup, that's kind of a normal thing for us to see that volumes start to pick up around that particular event. Kind of a wait and see. I don't know if the consumer has fully felt it to the point. It does appear we're heading in that direction. That could be favorable, frankly, for the most part of the consumer side of the business.

Got it. Thanks for that detail. Maybe just on working capital, I'm not sure if there's any maybe sensitivity to raw material inputs that we should be mindful of just as the year goes on, trying to be mindful of higher metal prices and pet chems. Not sure if like an earnings sensitivity or just any detail you would want to put on maybe working capital or free cash flow as we think about higher metal. Thank you. I'll turn it over.

Yeah. Really from a working capital perspective, no real concerns there. I'd say one thing to highlight, though. We are being very disciplined about our spend on capital for the remainder of the year. We want to make sure that we're hitting our guide and our targets that we've committed to the Street. There will be some products that we'll postpone, but we're not cutting back any of our growth or our value-adding capital products that are out there. We feel really confident that with our supply chain team and our efforts that they've done to secure a really strong supply chain, both around metal packaging and all the other inputs that are there. Really no concerns from this perspective right now. That's with our current environment, as we said.

Your next question comes from a line of Ghansham Panjabi from Baird. Your line is open.

Thank you. Good morning. Just kind of picking up on some of the last few questions. Obviously 1Q was impacted from a volume standpoint for all the reasons you kind of went through. 2Q, you gave some parameters as it relates to raw material cost inflation, et cetera, and we know what your full year guidance is. Specific to 2Q, do you expect earnings to grow year-over-year, or will it be comparable to sort of 1Q, just given what you called out as it relates to the price cost headwinds?

Yeah, Ghansham, we do expect earnings to grow in Q2. I will say, though, there is that inflationary impact for the raw materials that we talked about with freight and everything else that's there. That'll create a little bit of a margin drag for us and some of the pressures that are there, but we definitely expect earnings to grow.

On a year-over-year basis, just to clarify.

Yeah. No, Ghansham, I do want to reiterate that. I know we talked about it over and over, but in the soft volume environment, the team really did deliver on the bottom line expectations for the most part, and that is not changing as we see seasonal volumes increase in terms of the levels of productivity and savings and the programs that we've got in place. I just want to say again, hats off to our team in a soft volume environment, still being able to drop down within our expectations.

Yeah, for sure. A lot going on. As it relates to the volume impact of this particular inflation cycle, and obviously customers know that price increases are coming and so on and so forth, have you seen any sort of pre-ordering or just some sort of order pattern distortions that may be amplifying some of the volume that you're seeing early part of 2Q in terms of the recovery you called out?

No. In fact, it's again, based off the portfolio, the type of inflation that we're seeing is not really about product inflation, it's how we deliver. It's freight, obviously some energy, but not your typical, "Hey, you've got a 5%-10% price increase coming." In the next quarter, I need to load it up. No.

Okay. You haven't seen any change in the macro backdrop, just broadly speaking, for your industrial business either, right?

No. In fact, a little bit of concern about, yes, we had the weather impacts in the first quarter, but we've seen some green shoots here. A lot of it is self-help, entering new markets that we've never participated in before. As I mentioned earlier with saturating kraft using the, I guess, the furniture industry. Right now, you got to put that into the model to say, "Hey, we've got new business coming on that we never participated in before." Our operating rates, as I said, we've said a couple of times, are in pretty good shape.

Ghansham Panjabi, we have a reels business too that is doing really well in performance for us in Q1, and we expect that to continue into Q2 as well.

Your next question comes from the line of Anojja Shah from UBS. Your line is open.

Hi. Sorry. First, I just want to confirm, that $8 million-$10 million of inflation that you call out in 2Q, based on the lags in your pass-through, you're confident that should get recovered in the second half?

Okay. Assuming, though, and if there is additional inflation, then it's about a quarter lag, you said. Is that right?

Okay. Perfect. Also, you announced a new term loan at the end of March, and in the bridges you gave last quarter, you had a $0.20-$0.40 non-operational contribution on EPS. Is the interest on that new term loan sort of a headwind to that $0.20-$0.40, and is that part of why the EPS guidance is now on the lower end? How is that filtering through your 2024 guidance?

Yeah. The term loan that we announced is really, it's a delayed draw term loan to effectively retire our loan that would be due in September later this year. It's not a significant impact to our EPS range that's out there. It's more of these inflationary impacts in the short term that is driving our EPS down more than anything else.

Okay. Because of the tight range on EPS, that's why it's impacting EPS and not as much on the top-

Yeah. If you think about the EBIT. Oh, go ahead.

I was going to say, for the EBIT range, if you think about it's really $100 million that's out there. If you take the taxes out of that, it really becomes $133 million range, and your EPS is only $0.40. The two are disaggregated and disproportionate, almost a 3-to-1 ratio. It's your EBIT impacts. You can have a $10 million impact in your EBIT, but it'll drive a much larger impact on your EPS change that's out there.

Right. Got it. Finally, how are you feeling about your geographic footprint now with your current split between U.S. and Europe? I only ask because some of your peers are reconsidering the benefits that they thought they would get by adding on a European business, and they're sort of saying that the large global customers tend to source more regionally. Do you believe that your global platform gives you significant economies of scale that maybe outweigh some of the complexity drawbacks?

Yeah. We do. Certainly, economies of scale. We like the way we're situated right now. We're over half North America. I think it's about 40% in total company, both consumer and industrial, in Europe. We've seen that flip back and forth over the last decade or so, more in favor, stronger in favor of North America. It just depends on the market, the opportunity. It's not a conscious type situation. We're happy with the portfolio. We're happy with the geographies that we participate in. Southeast Asia, particularly on the consumer side, is becoming even more material. Frankly, as we noted earlier, continues to grow at a nice pace. We are where we are today, and we do not plan on any future portfolio or inorganic moves, but it wouldn't surprise me if we weren't talking years down the road and there's a different ratio there.

Sonoco Products Q1 2026 Earnings Call Transcript | Fortune

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Sonoco Products (SON) Q1 2026 Earnings Call Transcript

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