Sonoco Products Company (SON) Q1 2026 earnings summary

Executive summary

• Q1 2026 net sales were $1.68–$1.7 billion, down 1.9–2% year-over-year, mainly due to lower volumes and the ThermoSafe divestiture, with adjusted EPS of $1.20, flat year-over-year, driven by productivity savings and favorable price/cost environment despite severe weather, fire, and macroeconomic volatility.

• GAAP net income attributable to shareholders rose to $67.6 million ($0.68 per share) from $54.4 million, while adjusted net income and operating profit declined due to divestitures.

• Portfolio shifted toward resilient consumer-focused businesses, with two-thirds of sales from paper and metal cans, reducing resin-based packaging exposure by 70% since 2023.

• Opened a new paper can plant in Thailand and invested $20 million in U.S. industrial reels capacity, supporting growth in Asia and infrastructure markets.

• Board authorized the 43rd consecutive annual dividend increase, now $2.16 per share (3.8% yield).

Financial highlights

• Adjusted EBITDA was $276.5–$277 million, down 4–18.1% year-over-year; adjusted operating profit was $200.8–$201 million, down 5.6–6%.

• Gross profit margin declined to 20.6–20.9% from 20.7–21.8% year-over-year.

• Operating cash flow was negative $367.9–$368 million, mainly due to higher tax payments on divestiture gains and seasonal inventory build.

• Free cash flow was negative $428 million for the quarter.

• Capital expenditures were $60–$62.1 million, below expectations and down from prior year.

Outlook and guidance

• Full-year 2026 guidance: net sales of $7.25–$7.75 billion, adjusted EBITDA of $1.25–$1.35 billion, adjusted EPS of $5.80–$6.20 (expected at the low end), and operating cash flow of $700–$800 million, including $103 million in taxes from 2025 divestitures.

• Q2 inflationary cost impact estimated at $8–$10 million, expected to be recovered by Q3/Q4 if conditions stabilize.

• Management focus remains on cost control, margin improvement, and capital allocation to support growth and shareholder returns.

• Strategic investments in new facilities and capacity planned for Asia and the U.S.

• Earnings expected to grow year-over-year in Q2 despite margin drag from inflation.