Sonoco Products Q2 Earnings Call Highlights

Sonoco Products Q2 Earnings Call Highlights

Sonoco beat Q2 expectations with adjusted EPS of $1.51 and results that management said were in line with guidance, despite modest declines in net sales and adjusted EBITDA. Excluding the divested ThermoSafe business, revenue and EBITDA both grew 2% and adjusted EPS rose 17%. The industrial segment was the standout, supported by strong URB demand, productivity gains, and higher reel volumes tied to AI data center, power grid, and communications demand. Sonoco said URB mills were running at 95% utilization and backlogs extend into the third quarter. Cash flow and cost savings improved sharply, with operating cash flow up 56% and free cash flow up 139% year over year. The company also reiterated full-year guidance and said its profitability performance plan is delivering savings ahead of schedule.

Sonoco Products NYSE: SON said second-quarter 2026 results met company expectations and topped consensus estimates, as productivity gains and cost controls helped offset inflation in freight, chemicals, coatings and raw materials. President and CEO Howard Coker said the company delivered “solid second quarter results,” with particular strength in its industrial segment. Chief Financial Officer Paul Joachimczyk said the quarter reflected progress on priorities outlined at Sonoco’s Investor Day, including earnings growth, cash generation, margin maintenance and early benefits from the company’s profitability performance plan.

Net sales were $1.9 billion, down 1% from the prior year. Adjusted EBITDA was $324 million, also down 1%, while adjusted EBITDA margin was 17.2%, in line with the year-ago period. Adjusted earnings per share were $1.51, up from $1.37 a year earlier. Joachimczyk noted that prior-year results included contributions from the divested ThermoSafe business, which had generated $66 million of revenue, $11 million of EBITDA and $0.08 of EPS in the second quarter of 2025. Excluding ThermoSafe, he said second-quarter 2026 revenue and EBITDA grew 2%, and adjusted EPS rose 17%.

Industrial Segment Benefits From URB Demand, Productivity

Sonoco’s industrial segment outperformed management’s expectations, with operating profit up 4% from a strong year-earlier quarter and up 29% sequentially from the first quarter, Coker said. Segment sales rose 4% year over year to $643 million, supported by three points of pricing and one point from foreign exchange. Volume and mix were flat. Coker said industrial results were driven by $16 million in productivity gains, which more than offset price-cost headwinds tied to higher freight, chemicals, old corrugated containers, or OCC, and lumber. North American uncoated recycled paperboard, or URB, mills posted a 6.4% increase in trade tons, lifting mill utilization to 95%, which Coker described as the highest level in years. Demand was supported by new market development, including saturated URB used in laminates, as well as share gains. Reels volumes rose 10%, helped by demand from wire and cable customers tied to artificial intelligence data center infrastructure, as well as power grid and communications markets. In response to analyst questions about trade publication commentary suggesting the URB market had loosened, Coker said Sonoco was not seeing weakness in the markets it serves. He said the company’s URB backlogs extend through the third quarter and require imports from mills in Europe and Latin America to support North American demand. Joachimczyk added that North American mills were operating at 95% utilization and European mills at 92%.