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Item 7. Management’s Discussion and Analysis

2023-02-28 compared with 2022-02-28 · 313 added, 412 removed, 290 unchanged (71% of the section changed)

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General Overview

Sonoco is a leading provider of consumer packaging, industrial products and protective packaging with approximately 300 locations in 32 countries.

As previously disclosed, Sonoco changed its operating and reporting structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021.

The revised structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

The Company's former Protective Solutions and Display and Packaging segments were eliminated and the underlying businesses and their results were grouped into All Other or, in certain cases, subsumed into the remaining two segments.

Changes to the Consumer Packaging segment include moving the Plastics - Healthcare Packaging and Industrial Plastics business units to All Other.

The Industrial Paper Packaging segment, previously called Paper and Industrial Converted Products, remains unchanged except that it now includes the Company's fiber protective packaging business unit which was previously included in the Protective Solutions segment.

All Other includes our healthcare and protective packaging businesses, including Plastics - Healthcare, Sonoco ThermoSafe, consumer and automotive molded foam, retail security packaging, and paper amenities.

Prior to the divestiture of the Company's global display and packaging operations in two separate transactions, the European contract packaging business on November 30, 2020 and the U.S.

display and packaging business on April 4, 2021, these businesses were also included in All Other.

Generally, the Company serves two broad end-use markets, consumer and industrial, which, period to period, can exhibit different economic characteristics from each other.

Geographically, in 2021 approximately 65% of sales were generated in the United States, 17% in Europe, 7% in Asia, 4% in Canada and 7% in other regions.

The Company is a market-share leader in many of its product lines, particularly in uncoated recycled paperboard, tubes, cores, cones and composite containers.

Competition in most of the Company’s businesses is intense.

Demand for the Company’s products and services is primarily driven by the overall level of consumer consumption of non-durable goods;

however, certain product and service groups are tied more directly to durable goods, such as appliances, automobiles and construction.

The businesses that supply and/or service consumer product companies have tended to be, on a relative basis, less impacted by economic downturns than those that service industrial markets.

The primary objective of the Company’s enterprise strategy is to be the benchmark company for yield and stability in the packaging industry.

Financially, the Company’s key objectives are to grow annual base operating profit and to increase returns to shareholders over the long-term.

Sonoco is a leading provider of consumer packaging, industrial products and protective packaging with approximately 310 locations in 32 countries as of December 31, 2022 .

The Company's operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

Geographically, in 2022, approximately 72% of sales were generated in the United States, 13% in Europe, 6% in other regions, 5% in Asia, and 3% in Canada.

Sonoco’s strategy is to increase its long-term profitability and return capital to shareholders.

Over the past several years, we have simplified our business portfolio around fewer, bigger businesses which has reduced operating complexity and improved agility.

We are focused on efficient capital deployment into these larger, core business units to improve economic returns and improve integration effectiveness and speed for acquired strategic assets.

In parallel, we have worked on commercial, operational, and supply chain excellence programs to shift the mix of our business towards higher-valued products, improve our contracting process to better capture input costs and the value of the services we provide, and increase overall productivity.

Base operating profit is a non-GAAP financial measure reflecting adjustments to the reported GAAP operating profit for certain items.

For an explanation of how and why the Company uses such non-GAAP financial measures, and the types of adjustments made, see "Use of Non-GAAP Financial Measures" below.

The Company intends to deliver on these objectives by focusing its capital allocation strategy on increased internal investment into its core Consumer and Industrial businesses and by consolidating around a uniform operating model to expand the Company’s competitive advantages while simplifying its structure to improve efficiency and effectiveness.

Key focus areas for the Company's operating strategy include:

> Being strategic with capital investments while maintaining a strong balance sheet

> Expanding sustainability excellence

> Expanding operational excellence

> Expanding commercial excellence

> Expanding supply chain excellence

> Executing structural transformation.

The Company's primary focus areas in 2022 were to continue to manage supply chain challenges presented by the COVID-19 pandemic, generate profitable growth, further seek capital investments and acquisitions that augment the Company's core portfolio, improve operating cash flow and profit margins, and enhance the Company's sustainability.

2022 was a pivotal year for the Company as we made significant progress in our growth as a world-class packaging company with a portfolio of highly engineered and sustainable products to support our customers.

On January 26, 2022, the Company completed the acquisition of Ball Metalpack, renamed Sonoco Metal Packaging, a leading supplier of metal packaging for food and household products and the largest aerosol can producer in North America.

This acquisition expanded our sustainable packaging portfolio with metal packaging, a highly recyclable packaging substrate.

On November 15, 2022, the Company completed the acquisition of Skjern, a privately owned paper manufacturer in Denmark.

Skjern produces high-grade paperboard from recycled paper for rigid paper containers, tubes and cores, and other applications.

Skjern has programs to reduce its carbon emissions, while its operations are powered by a biomass boiler, making them less reliant on natural gas.

The acquisition is expected to expand production capacity for the Company’s converting operations and customers throughout Europe while capitalizing on the growing market for sustainable paper and packaging products.

Both acquisitions build on the Company's strategy of investing in our core businesses.

See additional information under “—Acquisitions and Divestitures—Acquisitions” below.

During the third quarter of 2022, the Company completed Project Horizon, a $125 million project to transform the corrugated medium machine in Hartsville, South Carolina to produce uncoated recycled paperboard ("URB").

The Company anticipates the upgraded paper machine to be fully operational early in 2023 and expects it to drive significant annualized savings as production ramps through 2023 and beyond.

The new URB machine, with a targeted annual production capacity of 180,000 tons, was designed with the goal of being the largest and lowest-cost producer of URB in the world, capable of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and external trade customers.

Project Horizon, which commenced in 2020, also included the completion of a new finished goods warehouse on the Hartsville campus as well as other infrastructure improvements to the Hartsville paper manufacturing complex.

21 FORM 10-K SONOCO 2022 ANNUAL REPORT

Impact on Operating Results

While the social distancing response to COVID-19 has resulted in increased consumer demand for certain food and household products, COVID-19 had an overall negative impact on results in 2021 but to a much lesser extent than 2020.

Consumer demand for certain food and household products retreated from the elevated levels of 2020 as the pantry stocking and panic buying phenomenon experienced in 2020 normalized in 2021.

This retreat in the Consumer Packaging segment was more than offset by a return to pre-pandemic volume levels in our Industrial Paper Packaging segment.

However, the supply chain constraints and labor shortages that were seen throughout the economy contributed to a negative price/cost relationship.

As the pandemic wanes, the Company expects sales volume, excluding acquisitions, to modestly increase.

Sales volume of at-home food packaging is expected to continue to normalize while demand in other consumer market segments picks up.

Volume in our Industrial Paper Packaging businesses as well as All Other is expected to improve.

The Company expects COVID-19 induced and other inflationary pressures to flatten out in 2022 and for selling prices to improve resulting in a favorable price/cost relationship.

Financial Flexibility and Liquidity

Sonoco has maintained a strong balance sheet and substantial liquidity in the form of cash, cash equivalents and revolving credit facilities, as well as the ability to issue commercial paper and to access liquidity in the banking and debt capital markets.

The following actions taken in 2021 largely related to the Company's efforts to reposition its cash balances and debt portfolio in anticipation of a waning of the COVID-19 pandemic:

• On April 5, 2021, the Company received cash proceeds totaling $79.7 million from the sale of its U.S.

display and packaging business.

• On May 10, 2021, the Company paid $150 million in connection with an accelerated share repurchase agreement to repurchase shares of its common stock.

• On May 25, 2021, the Company repurchased $63.2 million of its outstanding 5.75% notes, due November 2040, for a total cash cost of $82.0 million.

• On May 25, 2021, upon maturity, the Company paid $177.8 million to retire its 1% Euro loan.

• On June 30, 2021, the Company entered into a new five-year $750 million, unsecured revolving credit facility which replaced an existing $500 million facility.

Consistent with prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.

• On August 1, 2021, the Company repaid its $250 million, 4.375% debentures without penalty ahead of their November 2021 maturity.

Following the actions above, at December 31, 2021, the Company had approximately $171 million in cash and cash equivalents on hand and $750 million in committed availability under its revolving credit facility, of which $401 million was available for draw down net of $349 million of outstanding commercial paper.

At December 31, 2021, scheduled debt maturities in 2022 totaled approximately $412 million, including outstanding commercial paper.

The Company believes cash on hand and available credit, combined with expected net cash flows generated from operating and investing activities, will provide sufficient liquidity to cover these and other cash flow needs of the Company over the course of 2022 and beyond.

For additional information concerning the Company's liquidity, including debt transactions occurring subsequent to December 31, 2021, see "Capital Resources" in this Form 10-K.

Health, Safety and Business Continuity

The health and safety of Sonoco’s associates, contractors, suppliers and the general public are a top priority.

Included among the safety measures the Company implemented in consideration of COVID-19 are:

conducting health screenings for personnel entering our operations, routinely cleaning high-touch surfaces, following social distancing protocols, prohibiting all non-critical business travel, and encouraging all associates who can to work from home when possible.

Additionally, the Company maintains an internal site dedicated to the communication of COVID-related guidance and policies to our employees around the world.

Sonoco also has a Global Task Force to develop and implement business continuity plans to ensure its operations are as prepared as possible to be able to continue producing and shipping product to its customers without disruption.

Sonoco has a diverse global supply chain and to date has not experienced significant raw material or other supply disruptions.

The Company also continued efforts in commercial excellence to reposition pricing of certain items to less volatile indices while improving the timing of recovery for higher manufacturing.

The results of these efforts, along with the successful integration of the Metal Packaging acquisition, reflected positively in the Company's 2022 financial results which were a record in the 124-year history of the Company.

As the Company looks to 2023, capital allocation remains a key factor of our strategy.

We are focused on driving productivity as we expect to see the benefits of fewer supply chain and labor disruptions.

Actions taken over the past several years have built resiliency into our operating model and are expected to help offset inflation.

At the same time, we have invested capital in our core consumer and industrial businesses to position us well for longer term growth and profitability.

We remain focused on improving returns on invested capital through organic investments in our core, accretive acquisitions, and potential portfolio rationalization while focusing on further improving returns to shareholders.

Use of Non-GAAP Financial Measures

To assess and communicate the financial performance of the Company, Sonoco management uses, both internally and externally, certain financial performance measures that are not in conformity with generally accepted accounting principles (“non-GAAP” financial measures).

These non-GAAP financial measures reflect the Company’s GAAP operating results adjusted to remove amounts, including the associated tax effects, relating to restructuring initiatives, asset impairment charges, environmental charges, acquisition/divestiture-related costs, gains or losses from the divestiture of businesses, early extinguishment of debt, property insurance recoveries in excess of recorded losses, non-operating pension costs, certain income tax events and adjustments, and other items, if any, the exclusion of which management believes improves the period-to-period comparability and analysis of the underlying financial performance of the business.

The adjusted non-GAAP results are identified using the term “base,” for example, “base earnings.” Starting in the first quarter of 2022 and going forward, the Company will also include adjustments in these non-GAAP financial measures to exclude amortization expense on acquisition intangibles.

This change is being made to better align the Company's definition of base earnings with those of its peers, better reflect the Company's operating performance, and increase the usefulness of such measures to the investing community.

The Company’s base financial performance measures are not in accordance with, nor an alternative for, measures conforming to generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

These “non-GAAP” financial measures (referred to as "Base") reflect adjustments to the Company's GAAP results to exclude amounts, including the associated tax effects, relating to:

• restructuring initiatives;

• asset impairment charges;

• acquisition/divestiture-related costs;

• gains or losses from the divestiture of businesses;

• losses from the early extinguishment of debt;

• non-operating pension costs;

• amortization expense on acquisition intangibles;

• changes in last-in, first-out (“LIFO”) inventory reserves;

• certain income tax events and adjustments;

• other items, if any.

The Company's management believes the exclusion of the above items improves the period-to-period comparability and analysis of the underlying financial performance of the business.

The adjusted non-GAAP results are identified using the term “base,” for example, “base earnings.” As previously disclosed, effective January 1, 2022, the Company modified its definition of base results to include adjustments for amortization-related expense on acquisition intangibles.

Accordingly, base results for 2021 have been revised to conform with the current presentation.

This change was made to better align the Company's definitions of base results with those of its peers, to better reflect the Company's operating performance, and to increase the usefulness of such measures to the investing community.

The Company’s non-GAAP financial measures are not in accordance with, nor an alternative for, measures conforming to generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies.

In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.

Sonoco continues to provide all information required by GAAP, but it believes that evaluating its ongoing operating results may not be as useful if an investor or other user is limited to reviewing only GAAP financial measures.

The Company consistently applies its non-GAAP “base” performance measures presented herein and uses them for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of management and each business unit against plan/forecast all the way up through the evaluation of the Chief Executive Officer’s performance by the Board of Directors.

In addition, these same non-GAAP measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.

In addition, these same non-GAAP financial measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.

Sonoco management does not, nor does it suggest that investors should, consider these non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Sonoco presents these non-GAAP financial measures to provide users information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance.

Material limitations associated with the use of such measures are that they do not reflect all period costs included in operating expenses and may not reflect financial results that are comparable to financial results of other companies that present similar costs differently.

Furthermore, the calculations of these non-GAAP measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.

To compensate for these limitations, management believes that

22 FORM 10-K SONOCO 2021 ANNUAL REPORT

it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP measures that exclude certain elements, as described above.

Restructuring and restructuring-related asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency.

Material limitations associated with the use of such measures are that they do not reflect all period costs included in operating expenses and may not be comparable with similarly named financial measures of other companies.

Furthermore, the calculations of these non-GAAP financial measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.

To compensate for these limitations, management believes that it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP financial measures that exclude certain elements, as described above.

Restructuring and restructuring-related asset impairment charges are a recurring item as the Company's restructuring programs often require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency.

Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.

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However, this expense is subject to significant fluctuations from period to period due to changes in actuarial assumptions, global financial markets (including stock market returns and interest rate changes), plan changes, settlements, curtailments, and other changes in facts and circumstances.

Reconciliations of GAAP to base results are presented on pages 25 and 26 i n c onjunction with management’s discussion and analysis of the Company’s results of operations.

Reconciliations of GAAP to base results are presented under "—Reconciliations of GAAP to Non-GAAP Financial Measures" below in conjunction with management’s discussion and analysis of the Company’s results of operations.

Whenever reviewing a non-GAAP financial measure, readers are encouraged to review the related reconciliation to fully understand how it differs from the related GAAP measure.

Reconciliations are not provided for non-GAAP measures related to future years due to the likely occurrence of one or more of the following, the timing and magnitude of which management is unable to reliably forecast:

Reconciliations are not provided for non-GAAP financial measures related to future years due to the likely occurrence of one or more of the following, the timing and magnitude of which management is unable to reliably forecast:

possible gains or losses on the sale of businesses or other assets, restructuring costs and restructuring-related asset impairment charges, acquisition/divestiture-related costs, and the tax effect of these items and/or other income tax-related events.

These items could have a significant impact on the Company's future GAAP financial results.

2021 Overview

Management's primary focus areas in 2021 were managing through challenges of the COVID-19 pandemic, generating profitable growth, improving margins, and enhancing the Company's sustainability.

Overall, management was expecting relatively flat net sales.

Divestitures and acquisitions were expected to have a net negative impact as sales lost due to the divestiture of the Company's European contract packaging business were expected to be greater than the full-year impact of sales added by 2020 acquisitions.

This net sales decrease was expected to be mostly offset by an organic volume increase of approximately 2.0%.

Overall, the Company anticipated a negative price/cost relationship as the prices of key raw materials, such as recycled fiber and plastic resins, and freight costs were expected to rise.

Manufacturing and other productivity gains were expected to offset a significant portion of the negative price/cost impact and projected increases in labor and other costs.

The Company expected modest gross profit margin improvement while base operating profit as a percent of sales was expected to remain flat.

In line with expectations, divestitures, net of acquisitions, decreased sales by $337.2 million.

However, the Company exceeded its organic growth projection which, adjusted for the disposition of the global display and packaging business, was 2.9%.

This growth combined with increased selling prices, mostly implemented to recover rising raw material and other costs, led to an overall sales increase of 6.7%.

GAAP operating profit increased $129.0 million from 2020 largely driven by lower restructuring and asset impairment charges as well as a non-recurring loss on the 2020 sale of the Company’s European contract packaging business.

In 2021, the Company recorded after-tax asset impairment and restructuring charges of $8.8 million compared to $112.7 million in 2020.

The 2020 charges were largely attributable to its Plastics - Food thermoforming operations on the west coast of the United States and in Mexico.

Despite the increase in GAAP operating profit, total segment operating profit (referred to as base operating profit) decreased 2.2%.

This decline was driven by a negative price/cost environment, increases in labor and other costs, and the negative impact of divestitures (net of acquisitions).

These negative factors were only partially offset by productivity improvements and higher volumes.

Gross profit in 2021 was $1,061.9 million, compared with $1,046.3 million in 2020.

Despite the small increase, gross profit as a percentage of sales declined to 19.0%, compared to 20.0% in 2020.

This margin percentage reduction was the result of a negative price cost environment as the Company was unable to fully recover rising material and other operating costs.

GAAP selling, general and administrative (SG&A) expenses increased $29.7 million driven by more-normalized expenses for medical benefits, strategic information technology activity, and higher acquisition and divestiture transaction costs.

Despite this increase, SG&A expenses as a percentage of sales were flat in 2021 compared to 2020.

Pursuant to a resolution approved by the Company's Board of Directors, the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan") was terminated effective September 30, 2019.

Following completion of a limited lump-sum offering in April 2021, the Company settled all remaining liabilities under the Inactive Plan through the purchases of annuities in June 2021.

The Company made additional contributions to the Inactive Plan totaling approximately $124 million in 2021 in order to be fully funded on a termination basis at the time of the annuity purchase.

Excluding settlement charges of $550.7 million, the Company recorded 2021 pension and postretirement benefit expenses of approximately $44.9 million, compared with $58.0 million during 2020.

The decreased expense was primarily the result of recognizing only a partial year of expenses for the Inactive Plan due to its settlement in June 2021.

The aggregate net unfunded position of the Company’s various defined benefit plans decreased to $97 million at the end of 2021 compared with $294 million at the end of 2020.

This decrease reflects current-year contributions and investment returns as well as lower plan liabilities resulting from higher year-over-year discount rates.

Net (loss)/income attributable to Sonoco (GAAP earnings) was $(85.5) million for the year ended December 31, 2021, compared with $207.5 million for the year ended December 31, 2020, a year-over-year decrease of $(292.9) million, reflecting the above-mentioned pension settlement charges in 2021.

GAAP earnings represented (1.5)% of sales in 2021 compared to 4.0% of sales in 2020.

Although base operating profit declined somewhat, base earnings attributable to Sonoco increased 3.0%, or $10.2 million, year over year, reflecting lower net interest expense and a lower effective base income tax rate.

The effective tax rate on GAAP earnings was 41.9%, compared with 20.7% in 2020, and the effective tax rate on base earnings was 23.6%, compared with 25.1% in 2020.

The higher 2021 GAAP effective tax rate primarily resulted from a combination of the regular tax benefit recognized on the Company's reported pretax loss together with a discrete tax benefit from the realization of additional foreign tax credits generated by an amendment of the Company's 2017 US income tax return.

During 2021, the Company made significant progress on Project Horizon, a $125 million project to transform the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard ("URB").

Project Horizon also includes a new finished goods warehouse on the Hartsville campus as well as other infrastructure improvements to the Hartsville paper manufacturing complex.

Project Horizon began in the last half of 2020 and is expected to be completed in the third quarter of 2022.

The new URB machine is being designed with the goal of being the largest and lowest-cost producer of URB in the world, with a targeted annual production capacity of 180,000 tons, and capable of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and external trade customers.

Project Horizon is expected to drive significant annualized cost savings beginning in 2023.

On April 4, 2021, the Company completed the sale of its U.S.

display and packaging business, part of the All Other group of businesses, to Hood Container Corporation for $80.0 million in cash.

This business provided design, manufacturing and fulfillment of point-of-purchase displays, as well as contract packaging services, for consumer product customers and had approximately 450 employees.

Its operations included eight manufacturing and fulfillment facilities and four sales and design centers.

23 FORM 10-K SONOCO 2021 ANNUAL REPORT

On December 19, 2021, the Company entered into a definitive agreement to acquire Ball Metalpack Holding, LLC ("Ball Metalpack"), a leading manufacturer of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1.35 billion in cash subject to customary adjustments, including for working capital, cash and indebtedness.

Ball Metalpack was formed in 2018 and consists of eight manufacturing plants in the United States, and is headquartered in Broomfield, Colorado.

This acquisition fits the Company's strategy of investing in its core businesses as it complements our largest Consumer Packaging franchise – global rigid paper packaging.

In addition, it further expands the Company's sustainable packaging portfolio with metal packaging.

The acquisition of Ball Metalpack was completed on January 26, 2022.

See Note 20 to the Consolidated Financial Statements for additional information.

The Company generated $298.7 million in cash from operations during 2021, compared with $705.6 million in 2020.

The primary drivers of the decrease were the cash contributions to the Inactive Plan in 2021 to fully fund the plan prior to its settlement, and higher levels of working capital driven by increased business activity, inflation, and supply chain dynamics that affected customer demand and resulted in fluctuating inventory levels.

Cash generated from operations also declined due to the payment of a portion of social security taxes previously deferred pursuant to the CARES Act and increased cash paid for taxes as the tax benefit from the 2021 funding of the Inactive Plan was deducted on the Company's 2020 tax return.

Acquisitions and Divestitures

The Company completed four acquisitions during 2021 at a net cash cost of $20.7 million.

On December 30, 2021, the Company completed the acquisition of a recycling facility from American Recycling of Western North Carolina, LLC, a privately held company, for total cash consideration of $6.3 million.

The facility, located in Asheville, North Carolina, primarily services western North Carolina and upstate South Carolina for the processing of recycled materials.

On November 8, 2021, the Company completed the acquisition of D&W Paper Tube Inc., a privately owned manufacturer of paper tubes and cardboard cores, serving the carpet and textile industries and consisting of two manufacturing facilities in Chatsworth, Georgia, for total cash consideration of $12.8 million.

On August 3, 2021, the Company completed the acquisition of Allied Packaging, a privately owned manufacturer of paper packaging and related manufacturing equipment, consisting of a single manufacturing facility in Sydney, Australia, for total cash consideration of $0.8 million, and on March 8, 2021, the Company completed the acquisition of TuboTec, a small tube and core operation in Brazil, for total cash consideration of $0.8 million.

The financial results of all these acquired operations are included in the Company's Industrial Paper Packaging segment from the date acquired.

As discussed above, on December 19, 2021, the Company entered into a definitive agreement to acquire Ball Metalpack.

The acquisition of Ball Metalpack was completed on January 26, 2022.

See Note 20 to the Consolidated Financial Statements for further information about this acquisition and other subsequent events.

On September 30, 2021, the Company completed the sale of its Plastics - Food thermoforming operation in Wilson, North Carolina to Placon for net cash proceeds of $3.5 million, resulting in the recognition of a gain on the sale of $0.1 million, before tax.

On April 4, 2021, the Company completed the divestiture of its U.S.

display and packaging business, part of the All Other group of businesses, to Hood Container Corporation for $80 million in cash.

This business provided design, manufacturing and fulfillment of point-of-purchase displays, as well as contract packaging services, for consumer product customers and had approximately 450 employees.

Its operations included eight manufacturing and fulfillment facilities and four sales and design centers.

Net cash proceeds of $79.7 million were received on April 5, 2021.

The final working capital settlement occurred in the third quarter of 2021 with the Company receiving additional cash proceeds of $2.0 million and the buyer assuming certain liabilities totaling $0.8 million.

As a result, the Company recognized a net loss on the sale of the U.S.

display and packaging business totaling $2.8 million, before tax.

The divestiture of the U.S.

display and packaging business was preceded by the November 30, 2020 divestiture of the Company's European display and packaging business.

The decision to sell its global display and packaging businesses was part of the Company's efforts to simplify its operating structure to focus on growing its core Consumer and Industrial packaging businesses around the world.

These sales are not expected to notably affect consolidated operating margin percentages, nor do they represent a strategic shift for the Company that will have a major effect on the entity’s operations and financial results.

Consequently, the sales did not meet the criteria for reporting as discontinued operations.

The net proceeds from the sales were used for general corporate purposes.

The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic.

The Company completed three acquisitions during 2022 at a net cash cost of approximately $1.4 billion.

On November 15, 2022, the Company completed the acquisition of Skjern, a privately owned manufacturer of paper based in Denmark, for $88.6 million, net of cash acquired.

Skjern produces high-grade paperboard from recycled paper for rigid paper containers, tubes and cores, and other applications.

The acquisition is expected to expand production capacity for the Company’s converting operations and customers throughout Europe.

22 FORM 10-K SONOCO 2022 ANNUAL REPORT

On August 31, 2022, the Company completed the acquisition of Nordeste Tubetes and NE Tubetes (collectively “Nordeste”), two small tube and core operations in Brazil.

Total consideration for the two businesses was $6.5 million, including cash paid at closing of $3.9 million, additional payments in October and November 2022 totaling $0.7 million, and deferred payments totaling $1.9 million that are expected to be paid over the next six years.

On January 26, 2022, the Company completed the acquisition of Ball Metalpack, renamed Sonoco Metal Packaging, a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1.3 billion, net of cash acquired.

As previously disclosed, final consideration was subject to customary post-closing adjustments for working capital, cash and indebtedness and was finalized in the second quarter of 2022.

The Company received cash from the sellers totaling $14.8 million, of which $6.9 million had been reflected as a receivable at the time of the initial purchase price allocation.

Prior to the Company's acquisition of Metal Packaging, Ball Metalpack was a joint venture formed in 2018 and owned by Platinum Equity (51%) and Ball Corporation (49%).

As of December 31, 2022, Metal Packaging consisted of eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado.

Factors comprising goodwill at Metal Packaging include increased access to certain markets as well as the value of the assembled workforce.

Also, on November 9, 2022 , the Company entered into a definitive agreement to purchase the remaining equity interest in RTS from joint venture partner WestRock Company ("WestRock") and one WestRock paper mill in Chattanooga, Tennessee, for $330 million in cash, subject to customary closing adjustments.

In January 2023, both the Company and WestRock received a request for additional information and documentary material (a "Second Request") from the Antitrust Division of the U.S.

Department of Justice (the "DOJ").

Issuance of the Second Request extends the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), until 30 days after we and WestRock have each substantially complied with the Second Request, unless the period for review is extended voluntarily by the parties and the DOJ or is terminated earlier by the DOJ.

We anticipate completing the transaction in the second half of 2023, subject to the satisfaction or waiver of the closing conditions contained in the purchase agreement, including the expiration or early termination of waiting periods or extensions thereof under the HSR Act.

Upon completion of the transaction, the Company will own 100% of RTS, which is currently operated as a joint venture between Sonoco (35% ownership interest) and WestRock (65% ownership interest).

The RTS joint venture was formed in 1997 and combined the former protective packaging operations of WestRock and the Company to market solid fiber partitions from recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals.

On January 26, 2023, the Company completed the sale of its S3 business, a provider of customized waste and recycling management programs and part of the Company's Industrial Paper Packaging segment, to Northstar Recycling Company, LLC ("Northstar") for a total sales price of $15.3 million, including a 2.7% equity interest in Northstar valued at $5.0 million.

The Company expects to recognize a gain from the divestiture of this business of approximately $11.0 million, before tax, in the first quarter of 2023.

As previously disclosed, the Company completed the divestiture of its global display and packaging business in two separate transactions, the European contract packaging business on November 30, 2020 and the U.S.

display and packaging business on April 4, 2021.

These businesses, which included point-of-purchase displays, fulfillment operations, and contract packaging, were reported in All Other.

Although no divestitures were completed in 2022, the Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic.

See Note 3 to the Consolidated Financial Statements for further information about acquisitions and divestitures.

Restructuring and Asset Impairment Charges

Due to its geographic footprint (approximately 300 locations in 32 countries) and the cost-competitive nature of its businesses, the Company frequently seeks more cost-effective means and structures to serve its customers, to improve profitability, and to respond to fundamental changes in its markets.

Due to its geographic footprint (approximately 310 locations in 32 countries as of December 31, 2022) and the cost-competitive nature of its businesses, the Company frequently seeks more cost-effective means and structures to serve its customers, to improve profitability, and to respond to fundamental changes in its markets.

As such, restructuring costs have been and are expected to be a recurring component of the Company’s operating costs.

7 unchanged sentences

Restructuring/Asset impairment charges $ 56,910 $ 14,210

During 2022, the Company recognized restructuring charges related to severance for employees terminated as a result of various plant closures or whose positions were eliminated as part of the Company's ongoing organizational effectiveness efforts.

Restructuring charges were also incurred during the year for consulting services and costs related to plant closures, including equipment removal, utilities, plant security, property taxes, and insurance at closed facilities.

Asset impairment charges were recognized in the Industrial Paper Packaging and Consumer Packaging segments as the result of plant closures and were partially offset by gains from the sales of previously impaired assets and closed facilities during the year.

The Company recognized other asset impairment charges in 2022 totaling $10.1 million, primarily as a result of completing the exit of its operations in Russia during the second quarter of 2022.

These operations consisted of two small tube and core plants and were part of the Industrial Paper Packaging segment.

During 2021, the Company recognized severance charges for employees terminated as a result of various plant closures, employees impacted by Project Horizon, and employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.

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These charges consisted of fixed asset impairments in the Company's Plastics - Food thermoforming operations, part of the Consumer Packaging segment, and in the temperature-assured packaging business, part of the All Other group of businesses.

During 2020, the Company announced the closures of a paper mill in Canada, a paper machine in the United States, a cone operation in Europe and four tube and core plants, one in Europe and three in the United States (all part of the Industrial Paper Packaging segment);

and the closure of a paperboard specialties plant in the United States (part of the All Other group of businesses).

Restructuring actions in the Consumer Packaging segment included the closure of two graphic design operations, one in the United States and one in the United Kingdom, and the consolidatio n in the Company's Plastics - Food thermoforming operations on the west coast of the United States and in Mexico.

This consolidation resulted in the closu re of a manufacturing facility in the United States and the conversion of a manufacturing facility in Mexico into a warehouse and distribution center.

During the fourth quarter of 2020, the Company recognized other asset impairments totaling $77.9 million on certain long-lived, intangible, and right of use assets, primarily in the Company's Plastics - Food thermoforming operations.

In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 275 positions.

The Company expects to recognize future additional costs totaling approximately $8.4 million in connection with previously announced restructuring actions.

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Impairment (1)

Amortization of Acquisition Intangibles (2)

Acquisition/Divestiture

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Interest expense, net 97,041 — — — 136 97,177

Loss from the early extinguishment of debt 20,184 — — (20,184) —

(Loss)/Income before income taxes (160,982) 14,210 17,722 583,015 453,965

(Benefit from)/Provision for income taxes (67,430) 5,363 3,535 165,531 106,999

(Loss)/Income before equity in earnings of affiliates (93,552) 8,847 14,187 417,484 346,966

Income before income taxes 571,282 56,910 80,427 70,210 43,859 822,688

Provision for income taxes 118,509 11,269 19,554 17,640 29,788 196,760

Income before equity in earnings of affiliates 452,773 45,641 60,873 52,570 14,071 625,928

Equity in earnings of affiliates, net of tax 14,207 — — — — 14,207

Net (loss)/income (82,711) 8,847 14,187 416,090 356,413

Net income 466,980 45,641 60,873 52,570 14,071 640,135

Net (income) attributable to noncontrolling interests, net of tax (543) (99) — — — (642)

Net (loss)/income attributable to Sonoco (85,477) 8,847 14,187 418,142 355,699

Net income attributable to Sonoco $ 466,437 $ 45,542 $ 60,873 $ 52,570 $ 14,071 $ 639,493

Diluted weighted average common shares outstanding:

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Impairment (1)

Amortization of Acquisition Intangibles (2)

Acquisition/Divestiture

Other Adjustments (5)

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Interest expense, net 59,235 — — — 2,165 61,400

Income before income taxes $ 255,592 $ 145,580 $ 4,671 $ 49,076 $ 454,919

Provision for income taxes 53,030 32,868 1,236 27,126 114,260

Income before equity in earnings of affiliates $ 202,562 $ 112,712 $ 3,435 $ 21,950 $ 340,659

Loss from the early extinguishment of debt 20,184 — — — (20,184) —

(Loss)/Income before income taxes (160,982) 14,210 49,419 17,722 583,015 503,384

(Benefit from)/Provision for income taxes (67,430) 5,363 12,241 3,535 165,531 119,240

(Loss)/Income before equity in earnings of affiliates (93,552) 8,847 37,178 14,187 417,484 384,144

Equity in earnings of affiliates, net of tax 10,841 — — — (1,394) 9,447

Net income $ 207,241 $ 112,712 $ 3,435 $ 21,950 $ 345,338

Net (loss)/income (82,711) 8,847 37,178 14,187 416,090 393,591

Net (income) attributable to noncontrolling interests, net of tax (2,766) — — — 2,052 (714)

Net (loss)/income attributable to Sonoco $ (85,477) $ 8,847 $ 37,178 $ 14,187 $ 418,142 $ 392,877

Diluted weighted average common shares outstanding (6) :

99,608 469 100,077

Net income attributable to Sonoco $ 207,463 $ 112,652 $ 3,435 $ 21,950 $ 345,500

Per diluted common share $ (0.86) $ 0.09 $ 0.37 $ 0.14 $ 4.18 $ 3.93

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Additionally, 2020 includes net asset impairment charges totaling $100,242 mostly related to the Company's Plastics - Food thermoforming operations.

(2) Includes costs related to potential and actual acquisitions and divestitures.

(3) Includes non-operating pension expenses related to after-tax settlement charges of $410,417, related primarily to the settlement of the Inactive Plan in the second quarter.

(2) Beginning in 2022, the Company redefined base results to exclude amortization of intangible assets related to acquisitions.

Prior year results have been revised to conform with the new presentation.

(3) Includes legal and professional fees related to acquisition and divestiture transactions, whether proposed or consummated.

2022 also includes approximately $33,000 of fair value adjustments to acquisition-date inventory related to Metal Packaging.

(4) Includes non-operating pension costs, unrealized losses related to commodity hedges of approximately $8,000, change in LIFO inventory reserves of approximately $28,000, and the release of valuation allowance on foreign tax credits of approximately $13,200.

(5) N on-operating pension costs include settlement charges of approximately $551,000 related primarily to the settlement of the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan") in the second quarter.

(6) Due to the magnitude of certain expenses considered by management to be non-base, the Company reported a 2021 GAAP net loss attributable to Sonoco.

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However, the Company also presents base net income attributable to Sonoco, which excludes the net non-base items.

In order to maintain consistency and comparability of base diluted EPS, dilutive unexercised share awards were included in the calculation to the same extent they would have been had GAAP net income attributable to Sonoco been equal to base net income attributable to Sonoco.

(5) Includes non-operating pension costs, the loss on the sale of the Company's European contract packaging business and approximately $17,400 of income tax benefits related to the sale.

In order to maintain consistency and comparability of base diluted earnings per share, dilutive unexercised share awards were included in the calculation to the same extent they would have been had GAAP net income attributable to Sonoco been equal to base net income attributable to Sonoco.

25 FORM 10-K SONOCO 2022 ANNUAL REPORT

Results of Operations – 2022 Versus 2021

Net (loss)/income attributable to Sonoco ("GAAP results") was a net loss of $(85.5) million ($(0.86) per diluted share) in 2021, compared with net income of $207.5 million ($2.05 per diluted share) in 2020.

Net income/(loss) attributable to Sonoco ("GAAP results") was net income of $466.4 million ($4.72 per diluted share) in 2022, compared with a net loss of $(85.5) million ($(0.86) per diluted share) in 2021.

The GAAP results reflect net after-tax, non-base charges totaling $173.1 million and $478.4 million in 2022 and 2021, respectively.

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Amounts in Millions December 31, 2022 December 31, 2021

Non-Operating Pensions costs $ 423.5 $ 22.2

Net recognized benefit on 2017 amended U.

income tax return (30.0) —

Loss on early extinguishment of debt 15.0 —

Other non-base tax charges 15.5 —

Restructuring/Asset impairment charges 8.8 112.7

Euro derivative gain related to Euro loan repayment (3.3) —

Restructuring and asset impairment charges $ 45.5 $ 8.8

Amortization of acquisition intangibles 60.9 37.2

Acquisition and divestiture-related costs 27.6 14.2

Fair value adjustments to acquisition-date inventory 24.9 —

Changes in LIFO inventory reserve 21.4 —

Non-operating pension costs 5.1 423.5

Derivative losses/(gains) 6.6 (3.4)

Insurance settlement gains (2.7) (4.9)

Non-base income tax gains, net (17.8) (14.5)

Refund of foreign VAT and applicable interest — (3.1)

Net Loss/(Gain) on divestitures of businesses 1.2 (2.8)

Acquisition related costs 14.2 3.4

Net all other non-base charges, after tax (0.6) 2.5

Loss from the early extinguishment of debt — 15.0

Loss on divestiture of businesses — 1.2

All other non-base charges, net 1.6 4.4

Total non-base charges, after tax $ 173.1 $ 478.4

Adjusted for these items, base earnings in 2021 were $355.7 million ($3.55 per diluted share), compared with $345.5 million ($3.41 per diluted share) in 2020.

Both GAAP and base earnings in 2021 reflect the negative impact of price/cost which was especially impactful to our Consumer Packaging segment and our All Other group as the Company was not able to fully recover plastic resin and steel inflation.

Additionally, wage and other cost inflation, along with the negative impact of divestitures (net of acquisitions), also drove earnings down year over year.

These impacts were offset

26 FORM 10-K SONOCO 2021 ANNUAL REPORT

by productivity gains and volume/mix increase as a result of the global recovery as impact from the COVID-19 pandemic waned.

However, just as the quarantines and lock downs at the start of the pandemic drove demand in our Consumer Packaging segment due to pantry stocking, the easing of these restrictions drove year-over-year sales declines for this segment as consumer demand lessened.

GAAP earnings in 2021 were further unfavorably impacted by a $538.3 million increase in non-operating pension costs which was driven by the previously mentioned pension settlements.

This was partially offset by a $131.4 million decrease in restructuring activity and asset write-offs.

The 2021 full-year effective tax rates on GAAP and base earnings were 41.9% and 23.6%, respectively, compared with 20.7% and 25.1%, respectively in 2020.

The higher 2021 GAAP effective tax rate primarily resulted from a combination of the regular tax benefit recognized on the Company's reported pretax loss, together with a discrete tax benefit from the realization of additional foreign tax credits generated by an amendment of the Company's 2017 US income tax return.

Consolidated net sales for 2021 were $5.6 billion, a $353 million, or 6.7%, increase from 2020.

Adjusted for these items, base net income ("base earnings") in 2022 was $639.5 million ($6.48 per diluted share) , compared with $392.9 million ($3.93 per diluted share) in 2021.

Both GAAP and base earnings in 2022 reflect the impact of a positive price/cost relationship which was especially impactful to our Industrial Paper Packaging segment.

Additionally, the Metal Packaging acquisition contributed to the year-over-year increase in earnings.

These gains were partially offset by declines in volume, particularly in the Industrial Paper Packaging segment, as well as the negative impact of foreign currency exchange rates.

GAAP earnings in 2022 were favorably impacted by a $561.3 million decrease in non-operating pension costs which was driven by the settlement of the Inactive Plan in the second quarter of 2021.

This was partially offset by a $42.7 million increase in restructuring activity and asset write-offs, which included a $9.2 million impairment charge from the Company's exit of its Russia operations.

The effective tax rates on GAAP and base earnings for the full year 2022 were 20.7% and 23.9%, respectively, compared with 41.9% and 23.7%, respectively in 2021.

The decrease in the GAAP effective tax rate for 2022 was due primarily to the prior year regular tax benefit recognized on the Company's reported pretax loss together with a prior year discrete tax benefit from the realization of additional foreign tax credits.

The Company's 2022 GAAP rate also benefited from the release of a valuation allowance on foreign tax credits.

Consolidated net sales for 2022 were $7.3 billion, a $1.7 billion, or 29.7%, increase from 2021.

The components of the sales change were:

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Total sales increase $ 1,660

Sales volume/mix, adjusted for the display and packaging divestitures, rose approximately 2.9% driven by increases in the Industrial Paper Packaging segment and the All Other group of businesses.

These increases were largely due to the global recovery from disruptions caused by the COVID-19 pandemic.

Many of the Consumer Packaging segment's food packaging product lines benefited in the prior year from customers' preferences for at-home eating during the quarantines and lockdowns during the beginning of the pandemic.

The easing of quarantine and lockdown restrictions in 2021 resulted in volumes declining in these businesses to levels consistent with historical sales.

Selling prices were higher year over year in all segments as the Company increased prices to attempt to recover rising raw material and other costs.

Divestitures, net of acquisitions, reduced comparable year-over-year sales by $337 million.

Total domestic sales we re $3.7 billion, up 7.0% from 2020, as higher selling prices and demand increases in Industrial Paper Packaging and All Other businesses located in the United States more than offset domestic divestitures and demand declines for the Company's consumer products.

Sales volume/mix declined approximately 2.9% driven by decreases in the Industrial Paper Packaging segment partially offset by increases in the Consumer Packaging segment.

Volume/mix growth in the Consumer Packaging segment was driven by food product packaging.

Selling prices were higher year over year in all segments due to strong strategic pricing performance.

Additionally, sales increased by $1,035.0 million from the acquisition of Metal Packaging in January 2022.

Total domestic sales we re $5.2 billion, up 43.3% from 2021, as higher selling prices in all businesses located in the United States and sales from the Metal Packaging acquisition more than offset demand declines, primarily in the Industrial Paper Packaging segment, and the domestic divestiture of the U.S.

display and packaging business.

International sales were $2.0 billion, up 4.0% from 2021.

The year-over-year increase in international sales was driven by increased sales prices and higher volumes.

These increases were partially offset by lost sales from divestitures, net of acquisitions.

The year-over-year increase in international sales was driven b y increased sales prices.

Costs and Expenses/Margins

Despite the impact of divestitures, cost of sales increased $337.4 million in 2021, or 8.1%, from the prior year.

This increase was driven by raw material, freight, and other cost increases, as well as volume increases.

Gross profit margins decreased to 19.0% in 2021 from 20.0% in the prior year as cost inflation was only partially offset by productivity improvements.

Co st of sales increased $1,282.4 million in 2022, or 28.3% , from the prior year.

This increase was largely driven by inflation, which had the impact of increasing the Company's LIFO inventory reserves, and costs added by the January 2022 acquisition of Metal Packaging, including expensing the acquisition-date fair value adjustments to finished goods inventory.

Gross profit margins increased to 19.9% in 2022 from 19.0% in the prior year due to a positive price/cost relationship.

Selling, general and administrative ("SG&A") expenses increased $149.2 million, or 26.7%, and were 9.8% of sales compared to 10.0% of sales in 2021.

The current year increase in SG&A expenses was driven by higher costs of providing medical benefits, strategic information technology activity, and higher acquisition and divestiture-related transaction costs.

GAAP operating profit was 8.7% of sales in 2021 compared to 6.8% in 2020.

Base operating profit decreased to 9.2% of sales in 2021 compared to 10.1% in 2020.

GAAP operating profit increased $129.0 million and base operating profit decreased $11.6 million.

The increases in 2021 GAAP operating profit and operating profit margin are largely attributable to a $131.4 million decrease in restructuring and asset impairment charges as well as an $11.8 million year-over-year decrease in losses from divestitures of businesses.

The decreased base operating profit margin reflects the previously mentioned decline in gross profit margin as well as higher SG&A costs.

The current year increase in SG&A expenses was driven by the January 2022 acquisition of Metal Packaging, increased amortization of acquisition intangibles, higher acquisition and divestiture transaction costs, losses on certain derivative transactions, increased compensation and benefits, increased information technology costs, and the absence of non-recurring insurance gains and VAT refunds in the prior year.

26 FORM 10-K SONOCO 2022 ANNUAL REPORT

Restructuring and asset impairment charges totaled $56.9 million and $14.2 million in 2022 and 2021, respectively.

The year-over-year increase was driven by higher year-over-year restructuring activity in the current year, including a $9.2 million impairment charge resulting from the Company’s exit from its Russian operations.

Prior year restructuring costs were offset by gains recorded in 2021 for the sale of buildings at previously closed facilities.

Additional information regarding restructuring actions and asset impairments is provided in Note 4 to the Company’s Consolidated Financial Statements.

Additional information regarding the loss on the sale of the Company's domestic display and packaging business as well as the loss on the sale of the European contract packaging business is provided in Note 3 to the Company’s Consolidated Financial Statements.

Non-operating pension costs increased $538.3 million in 2021 to a total of $568.4 million, compared with $30.1 million in 2020.

The higher year-over-year expense is primarily due to the settlement of the Inactive Plan.

Service cost, a component of net periodic benefit plan expense, is reflected in the Company's Consolidated Statements of Income with approximately 75% in cost of sales and 25% in selling, general and administrative expenses.

Non-operating pension costs were $7.1 million in 2022, compared with $568.4 million in 2021.

The year-over-year decrease of $561.3 million was primarily due to the settlement of the Inactive Plan in the second quarter of 2021, resulting in a $538.7 million settlement charge.

See Note 13 to the Consolidated Financial Statements for further information on employee benefit plans.

In 2021, the Company recognized a loss on the early extinguishment of debt totaling $20.2 million pursuant to a tender offer through which the Company retired a portion of its 5.750% notes due November 2040.

See Note 9 to the Consolidated Financial Statements for further information.

Net interest expense totaled $97.0 million for the year ended December 31, 2022, compared with $59.2 million in 2021.

The decrease was primarily due to the impact of lower average borrowings as a result of the Company's efforts to reposition its cash balances and debt portfolio in anticipation of a waning of the COVID-19 pandemic.

27 FORM 10-K SONOCO 2021 ANNUAL REPORT

The increase was primarily due to the higher year-over-year debt balances related to the financing of the January 2022 acquisition of Metal Packaging.

Reportable Segments

The Company changed its operating and reporting structure in January 2021 and, as a result, realigned certain reportable segments effective January 1, 2021.

The revised structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

Segment financial information for prior periods has been recast to conform to the current-year presentation.

The Company's operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

Consolidated operating profits, reported as “Operating Profit” in the Company's Consolidated Statements of Income, are comprised of the following:

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Restructuring/Asset impairment charges (56.9) (14.2)

Acquisition/(Divestiture)-related costs (17.7) (4.7) 276.6 %

Amortization of acquisition intangibles (80.4) (49.4) 62.8 %

Other non-base income/(charges), net (107.1) (14.3)

1 unchanged sentence

*Due to rounding, amounts above may not sum to the totals presented

Segment results viewed by Company management to evaluate segment performance do not include restructuring charges, asset impairment charges, acquisition/divestiture-related charges, gains or losses from the sale of businesses, specifically identified tax adjustments, and certain other items, if any, the exclusion of which the Company believes improves comparability and analysis.

Segment results viewed by Company management to evaluate segment performance do not include restructuring/asset impairment charges, acquisition/divestiture-related charges, gains or losses from the divestiture of businesses, amortization of acquired intangibles, changes in LIFO inventory reserves, and certain other non-operational income and expenses, if any, the exclusion of which the Company believes improves comparability and analysis.

Accordingly, the term “segment operating profit” is defined as the segment’s portion of “Operating profit” excluding those items.

General corporate expenses, with the exception of restructuring charges, asset impairment charges, acquisition/divestiture-related charges, net interest expense and income taxes, have been allocated as operating costs to each of the Company’s reportable segments.

All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other.

See Note 18 to the Company’s Consolidated Financial Statements for more information on reportable segments.

5 unchanged sentences

Capital spending 127.5 60.5 110.7 %

Trade sales increased year over year due to sales price increases implemented to recover rising material and other operating costs.

The year-over-year impact of acquisitions on sales totaled $21.7 million and included a full year of sales from Can Packaging, acquired August 3, 2020.

These positive impacts were somewhat offset by volume/mix declines as volume erosion in rigid paper containers, driven by a return to more normal demand as eased restrictions related to the COVID-19 pandemic decreased consumers' preference for at-home meals.

Volume/mix increases in the other businesses in the segment partially offset this year-over-year decline.

Foreign currency translation increased sales by approximately $25 million year over year due to a weaker U.S.

Consumer Packaging segment trade sales increased year over year primarily due to sales added by the acquisition of Metal Packaging in January 2022 and strong strategic pricing performance throughout the consumer businesses .

Positive volume/mix growth for the full year was driven by food products.

Foreign currency translation decreased sales by approximately $63 million year over year due to a stronger U.S.

Domestic sales were approximately $2,960 million , up 84.1% , or $1,352 million , from 2021, while international sales were approximately $808 million, up 6.2%, or $47 million , from 2021.

Segment operating profits decreased by $25.6 million year over year and operating profit margins of 10.7% were down 181 basis points from 2020.

The decreases in segment operating profits and operating profit margins were largely driven by rising material costs and volume/mix declines which were partially offset by productivity and the full-year impact of the Can Packaging acquisition.

Capital spending in the segment included numerous productivity projects and expansion of manufacturing capabilities in North America (primarily rigid paper containers and flexible packaging), Europe and Asia (primarily rigid paper containers).

Segment operating profits increased by $251.1 million year over year and operating profit margins increased from 11.6% to 14.0%.

The increases in segment operating profits and operating profit margins were largely driven by the Metal Packaging acquisition, favorable price/cost relationship, including the benefits of strategic pricing initiatives, and productivity gains.

Capital spending in the segment included numerous productivity projects and expansion of manufacturing capabilities in North America (primarily rigid paper containers, metal packaging, and flexible packaging), Europe and Asia (primarily rigid paper containers).

27 FORM 10-K SONOCO 2022 ANNUAL REPORT

Industrial Paper Packaging

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Domestic trade sales in the segment increased $190 million, or 13.3%, to $1,611 million, while international trade sales increased $31 million, or 2.9%, to $1,073 million.

The increase in both domestic and international trade sales resulted from higher selling prices implemented to cover inflation on raw materials and other costs.

Additionally, strong volume/mix, especially in global tubes and cores, increased sales year over year as these businesses began to recover from the effects of disruptions caused by the COVID-19 pandemic.

Additionally, sales grew approximately $25 million from the positive impact of a weaker U.S.

dollar year over year.

Segment operating profit increased year over year, driven by volume gains, strong productivity improvements, and a positive price/cost relationship.

During 2021, the Company made significant progress on Project Horizon, its $125 million investment to transform the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard ("URB").

Project Horizon also includes a new finished goods warehouse on the Hartsville campus as well as other infrastructure improvements to the Hartsville paper manufacturing complex.

Project Horizon began in the last half of 2020 and is expected to be completed in the third quarter of 2022.

The new URB machine is being designed with the goal of being the largest and lowest-cost producer of URB in the world, with a targeted annual production capacity of 180,000 tons and capable

28 FORM 10-K SONOCO 2021 ANNUAL REPORT

of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and external trade customers.

Project Horizon is expected to drive significant annualized cost savings beginning in 2023.

The increase in both domestic and international trade sales resulted primarily from strong strategic pricing performance, with selling prices increased to cover increased raw material and other operating costs.

Those gains were partially offset by the negative impact of foreign currency translation of approximately $112 million and lower volume/mix globally in both converted products and paper, which also includes the impact of the exit of the corrugated medium market from the conversion of the Company's #10 paper machine.

Segment operating profit increased year over year, driven by a positive price/cost relationship, partially offset by decreased volume/mix, productivity losses, and the negative impact from foreign currency translation due to a stronger dollar.

During the third quarter of 2022, as part of Project Horizon, the #10 paper machine on the Company's Hartsville campus was shut down to allow for its conversion from a corrugated medium machine to an URB machine.

This planned shutdown resulted in an expected loss of volume and lower absorption of fixed costs.

Late in the third quarter, the #10 machine began production of URB.

As discussed above, the new URB machine was designed with the goal of being one of the largest and lowest-cost producers of URB in the world, with a targeted annual production capacity of 180,000 tons and capable of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and external trade customers.

Project Horizon is expected to drive significant annualized cost savings as production ramps through 2023 and beyond.

In addition to Project Horizon, capital spending in the segment included modifications of several paper machines in North America, numerous productivity projects, and IT investments.

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Capital spending 21.2 22.8 (7.0) %

The main driver of the year-over-year decrease in sales was $361 million in divested sales related to the divestitures of the Company's European contract packaging and U.S.

display and packaging businesses in November 2020 and April 2021, respectively.

Strong volume/mix increases in the remaining businesses in the group as well as higher selling prices, implemented to offset higher raw material and other costs, somewhat offset divested sales.

All Other operating profit decreased year over year, driven by the display and packaging divestitures as well as a negative price/cost environment.

Volume/mix gains and strong productivity improvements partially offset these losses.

The year-over-year increase in sales was due to increased selling prices implemented to recover increased costs.

The gains due to pricing were partially offset by the $34 million impact of the 2021 divestiture of the Company's U.S.

display and packaging business and the negative impact of foreign currency translation.

All Other operating profit increased year over year, driven by a positive price/cost relationship.

Operating profit increases were partially offset by foreign currency translation and the impact of the divested display and packaging business.

Capital spending in the All Other group of businesses was mostly related to customer development and productivity related projects in North America, primarily in our molded foam protective packaging and temperature assured businesses.

1 unchanged sentence

Operating Activities

Cash flows from operations totaled $298.7 million in 2021 and $705.6 million in 2020.

Although GAAP net (loss)/income decreased $290.0 million year-over-year, the decline was essentially offset by the year-over-year impact of increases in non-cash pension costs from pension settlement charges partially offset by lower non-cash asset impairment activity in 2021.

Cash pension contributions in 2021 were $163.7 million, a year-over-year increase of $123.2 million.

This increase was primarily related to funding the Inactive Plan prior to settling the plan's obligations in the second quarter of 2021.

Cash paid for taxes increased $68.6 million year-over-year;

2020 tax payments benefited from a deduction related to the anticipated 2021 contributions to the Inactive Plan.

Working capital consumed $107.4 million of cash in 2021 compared to providing $51.5 million in 2020.

The additional cash consumption of $158.9 million was primarily driven by recovery from disruptions caused by the COVID-19 pandemic as net working capital grew throughout the year driven by increased business activity levels, inflation, and supply chain dynamics that affected customer demand and resulted in fluctuating inventory levels.While higher raw material prices increased year-end 2021 balances for both inventory and accounts payable, the Company also made pre-buys of certain raw materials in anticipation of 2022 price increases and to mitigate stock-out risk.

Accounts receivable consumed $167.6 million more cash in 2021 than in 2020 due to higher fourth-quarter sales activity compared to the prior year.

The Company continued to actively manage collections and saw year-over-year improvement in its already strong customer payment terms compliance;

however, offsetting this benefit was an increase in the average length of customer payment terms due largely to sales mix.

Accrued expenses and other assets and liabilities used $7.3 million of cash in 2021 compared with a $56.5 million provision of cash in 2020.

The year-over-year change was largely the result of a benefit in 2020 from the deferral of payments of the Company's portion of social security taxes of approximately $32 million, pursuant to the CARES Act, while 2021 reflects the subsequent payment of one half of the deferred amount.

The remaining amount deferred is expected to be paid before December 2022.

Cash flows from operations totaled $509.0 million in 2022 compared with $298.7 million in 2021, a year-over-year increase of $210.4 million.

Although GAAP net income increased $549.7 million year over year, the increase was largely due to a decline in non-cash pension costs, and their related tax effects, attributable to the pension settlement charges incurred in 2021.

Net income in the current year also reflected the earnings impact of the Metal Packaging acquisition and higher non-cash expenses for depreciation and amortization, up $63.6 million, and net asset impairment charges, up $25.5 million.

Cash pension contributions in 2022 were $37.4 million, a year-over-year decrease of $126.3 million from 2021 as additional contributions were required in the prior year to fully fund the Inactive Plan prior to settling the plan's obligations in the second quarter of 2021.

Cash paid for taxes decreased $10.7 million year over year;

2022 tax payments benefited from additional accelerated tax depreciation in the United States resulting from the Metal Packaging acquisition.

Accrued expenses and other assets and liabilities provided $17.9 million of cash in 2022 and used $13.4 million of cash in 2021.

The year-over-year change was largely the result of higher management incentive accruals and higher accrued interest stemming from debt incurred to finance acquisition activity in 2022, partially offset by the second and final payment of certain 2020 payroll taxes that were deferred under the CARES Act.

These provisions of cash were partially offset by changes in net working capital, which consumed $328.7 million of cash in 2022 and $107.4 million of cash in 2021.

The additional consumption of $221.3 million was primarily driven by higher inventory levels resulting from pre-buys of steel in the Metal Packaging business, coupled with the impact of inflation and inventory build in the Company's food businesses.

Accounts payable used $145.2 million more cash in 2022 than in 2021 as business levels over the last few weeks of 2022 were lower than the comparable period in 2021 and the higher levels of accounts payable at the end of 2021 were paid during 2022.

Accounts receivable provided $147.3 million more cash in 2022 than in 2021 as the Company continued to actively manage collections and drive strong customer payment terms compliance.

Investing Activities

Cash used by investing activities was $1,741.4 million in 2022, compared with $165.9 million in 2021.

Capital spending was $256.0 million in 2021, compared with $194.1 million in 2020, an increase of $61.9 million primarily due to spending on Project Horizon, a $125 million project to convert our corrugated medium machine to a state-of-the-art uncoated recycled paperboard machine.

Spending on acquisitions used $1,427.0 million of cash in 2022 compared with $22.2 million in 2021.

Proceeds from the sale of businesses provided $91.6 million of cash in 2021 primarily from the sale of the Company's U.S.

display and packaging business, compared to $103.4 million in 2020, principally from the sale of the Company's European contract packaging business.

The increase in acquisition spending was driven by the January 2022 acquisition of Metal Packaging.

Capital spending was $328.8 million in 2022, compared with $256.0 million in 2021, an increase of $72.8 million primarily due to increased spending in the Consumer Packaging segment related to numerous productivity projects and expansion of manufacturing capabilities in North America, Europe and Asia.

Capital spending on Project Horizon, a $125 million project to convert our corrugated medium machine to a state-of-the-art uncoated recycled paperboard machine, declined year over year as spending was substantially completed in 2022.

28 FORM 10-K SONOCO 2022 ANNUAL REPORT

There were no proceeds from the sale of businesses in 2022, compared to $91.6 million in 2021, primarily from the sale of the Company's U.S display and packaging business.

The Company received proceeds from the sale of assets totaling $9.6 million in 2022 compared with $13.2 million in the prior year.

Financing Activities

Net cash used by financing activities increased $350.7 million year over year as financing activities used $513.5 million of cash in 2021, compared with $162.9 million in 2020.

The greater use of cash reflects a year-over-year increase in share repurchases of $209.6 million pursuant to a repurchase authorization approved by the Company's Board of Directors in April 2021.

The greater use of cash also reflects higher year-over-year net debt repayments of $92.9 million in 2021 compared with 2020 and $20.1 million of excess cash costs related to the early extinguishment of debt in the current year.

Cash dividends increased 3.5% to $178.6 million in 2021 compared to $172.6 million in 2020, reflecting a full year of the $0.02 per share increase in the quarterly dividend payment approved by the Board of Directors in February 2021.

The change in outstanding checks provided cash of $7.0 million in 2021 while providing $21.0 million in the prior year.

The year-over-year change is the result of the timing and size of the last accounts payable check runs in December 2021 and December 2020 relative to the Company's December 31 year end.

Other financing cash flows also included $4.4 million of proceeds realized from an interest rate swap in 2021, compared with $14.5 million in 2020.

29 FORM 10-K SONOCO 2021 ANNUAL REPORT

Net cash provided by financing activities totaled $1,294.2 million in 2022, compared with a net use of cash of $513.5 million in 2021.

Financing activities in 2022 included net proceeds of $1,189.9 million from the issuance of green bonds and proceeds from a $300 million three-year term loan facility.

These proceeds were used primarily to fund the January 2022 acquisition of Metal Packaging.

The Company received an additional $400.0 million of proceeds from a 364-day term loan facility on December 2, 2022.

These proceeds were used for general corporate purposes, including the repayment of certain short-term debt.

The use of cash in 2021 reflects $212.0 million of share repurchases pursuant to a repurchase authorization approved by the Company's Board of Directors in April 2021.

No repurchases were made under this authorization in 2022.

Cash of $14.5 million was used to purchase the remaining shares of a noncontrolling interest in 2022 and excess cash costs related to the early extinguishment of debt used $20.1 million of cash in 2021.

Cash dividends totaled $187.1 million in 2022 compared to $178.6 million in 2021, reflecting the increase in the quarterly dividend payment from $0.45 per share to $0.49 per share approved by the Board of Directors in February 2022, partially offset by the impact of the share repurchases completed in 2021.

The change in outstanding checks used cash of $18.5 million in 2022 while providing cash of $7.0 million in the prior year.

The year-over-year change is the result of the timing and size of the last accounts payable check runs in 2022 and 2021 relative to the Company's December 31 year end.

Capital Resources

Current assets decreased yea r over year by $171.9 million to $1,658.7 million at December 31, 2021, and current liabilities increased by $14.1 million to $1,525.8 million, resulting in a decrease in the Company’s ratio of current assets to current liabilities to 1.1 at December 31, 2021 from 1.2 at December 31, 2020.

Current assets were lower due to a decrease in cash largely stemming from repurchases of the Company's common stock in 2021, contributions to the Inactive Plan, and greater year-over-year net repayments of debt.

The decrease in cash was partially offset by increases in accounts receivable and inventory.

Current liabilities were higher year over year primarily due to an increase in accounts payable, partially offset by a reduction in accrued expenses as a result of funding the outstanding liabilities of the Inactive Plan pursuant to settling the obligations of the plan through lump sum payments and the purchase of annuities during the second quarter of 2021.

Current assets increased year over year by $703 million to $2,361 million at December 31, 2022, and current liabilities increased by $218 million to $1,744 million, resulting in an increase in the Company’s ratio of current assets to current liabilities to 1.4 at December 31, 2022 from 1.1 at December 31, 2021.

Current assets were higher as a result of the acquisition of Metal Packaging in January 2022 and higher inventory levels resulting from pre-buys of steel in the Metal Packaging business, coupled with the impact of inflation and inventory build in the Company's food businesses.

The year-over-year increase in current liabilities was primarily due to an increase in trade accounts payable stemming from the buildup of inventory, an increase in the short-term borrowings, and higher accrued interest related to the green bonds used to fund the Metal Packaging acquisition.

The Company’s cash balances are held in numerous locations throughout the world.

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The Company, as part of its ongoing efforts to improve cash flow and related liquidity, works with suppliers to improve its terms and conditions, including extending payment terms.

Beginning in 2020, the Company started facilitating a voluntary supply chain financing program (the "program") to provide certain suppliers with the opportunity to sell receivables due from the Company to the program's participating financial institution.

Beginning in 2020, the Company also began a voluntary supply chain financing program (the "program") to provide certain suppliers with the opportunity to sell receivables due from the Company to the program's participating financial institution.

Such sales are conducted at the sole discretion of both the suppliers and the financial institution on a non-recourse basis at a rate that leverages the credit rating of the Company and thus might be more beneficial to the supplier.

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The Company does not enter into any agreements with suppliers regarding their participation in the program.

All outstanding amounts owed under the program are recorded within trade accounts payable.

The amount owed to the participating financial institution under the program and included in accounts payable for continuing operations was $47 million at December 31, 2021.

All amounts outstanding at December 31, 2022 under the program were recorded within trade accounts payable.

The amount owed to the participating financial institution under the program and included in accounts payable for continuing operations was $52.4 million at December 31, 2022 and $46.8 million at December 31, 2021.

The Company accounts for all payments made under the program as a reduction to cash flows from operations and reports them within "changes in payable to suppliers" in the Consolidated Statements of Cash Flows.

The total amount settled through the program and paid by the Company to the participating financial institution was $178 million during 2021 and $50 million during 2020, the first year of the program.

The Company expects that the amounts settled through the program will continue to grow in 2022 and future periods.

The total amount settled through the program and paid by the Company to the participating financial institution was $270 million during 2022 and $178 million during 2021.

A downgrade in the Company's credit rating or changes in the financial markets could limit financial institutions’ willingness to commit funds to, and participate in, the program.

However, the Company does not believe a reduction in, or the elimination of, the program would have a material impact on its working capital or cash flows.

The Company’s total debt at December 31 , 2021, was $1,611 million, a year-over-year decrease of $90 million.

The year-over-year change includes the following actions taken in 2021 related to the Company's efforts to reposition its cash balances and debt portfolio in anticipation of a waning of the COVID-19 pandemic :

• On April 5, 2021, the Company received cash proceeds totaling $79.7 million from the sale of its U.S.

display and packaging business.

• On May 10, 2021, the Company paid $150 million in connection with an accelerated share repurchase agreement to repurchase shares of its common stock.

• On May 25, 2021, the Company repurchased $63 .2 million of its outstanding 5.75% notes, due November 2040, for a total cash cost of $82.0 million.

• On May 25, 2021, upon maturity, the Company paid $177.8 million to retire its 1% Euro loan.

• On June 30, 2021, the Company entered into a new five-year $750 million, unsecured revolving credit facility which replaced an existing $500 million facility.

Consistent with prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.

• On August 1, 2021, the Company repaid its $250 million, 4.375% debentures without penalty ahead of their November 2021 maturity.

Following the actions above, at December 31, 2021, the Company had approximately $171 million in cash and cash equivalents on hand, $750 million in committed availability under its revolving credit facility, of which $401 million was available for drawdown, net of $349 million of outstanding commercial paper balances.

The Company has the contractual right to dra w funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market.

Scheduled debt maturities in 2022 total approximately $412 million, including outstanding commercial paper.

As of December 31, 2021, the Company had scheduled debt maturities of $411.5 million in 2022, including $349.0 million of commercial paper, and had scheduled debt maturities of $8.0 million, $6.1 million and $5.3 million in 2023, 2024 and 2025, respectively.

S ee Note 9 to the Consolidated Financial Statements for additional information regarding the Company's contractual principal debt maturities.

On January 21, 2022, subsequent to the end of the fiscal year, the Company completed its inaugural offering of green bonds to support the Company's sustainability strategy.

The aggregate principal amount of the unsecured notes totaled $1.2 billion, consisting of $400 million aggregate principal amount of 1.800% Notes due 2025, $300 million aggregate principal amount of 2.250% Notes due 2027, and $500 million aggregate principal amount of 2.850% Notes due 2032.

Also on January 21, 2022, the Company entered into a $300 million term loan facility maturing in January 2025 with a syndicate of eight banks.

The funds from this facility were drawn on January 26, 2022 and used, along with a portion of the net proceeds from the bonds and commercial paper borrowings, to fund the acquisition of Ball Metalpack, which was consummated the same day.

See Note 20 to the Consolidated Financial Statements for additional information about these subsequent events.

The Company's contractual obligation maturities for interest payments on outstanding fixed-rate, long-term debt, including the notes issued on January 21, 2022, as well as financing fees on the backstop line of credit, are expected to total approxim ate ly $76.4 million i n 2022, $78.2 million in both 2023 and 2024, and $72.2 million in 2025.

The Company’s total debt at December 31, 2022, was $3.2 billion, a year-over-year increase of $1.6 billion.

The year-over-year change reflects the following actions taken during 2022:

• On January 21, 2022, the Company completed its inaugural offering of green bonds to support the Company's sustainability strategy and to fund the acquisition of Metal Packaging.

The aggregate principal amount of the unsecured notes totaled $1.2 billion, consisting of the following:

◦ $400 million aggregate principal amount of 1.800% Notes due 2025,

◦ $300 million aggregate principal amount of 2.250% Notes due 2027, and

◦ $500 million aggregate principal amount of 2.850% Notes due 2032.

• On January 21, 2022, the Company entered into a $300 million term loan facility, maturing on January 27, 2025, with a syndicate of eight banks.

29 FORM 10-K SONOCO 2022 ANNUAL REPORT

Capital spending is expected to total approximately $325 million in 2022, higher than 2021, due to expected spending on projects that had been planned for 2021, but were delayed, anticipated capital investments at Ball Metalpack, and continued spending on Project Horizon, which is expected to total approximately $50 million in 2022.

• On December 2, 2022, the Company entered into a $400 million term loan facility, maturing on December 1, 2023, with a syndicate of banks.

The full amount was drawn on December 2, 2022, and the proceeds used for general corporate purposes, including repayment of certain short-term debt.

As previously disclosed, the Company also maintains a $750 million, unsecured revolving credit facility, maturing in June 2026, that supports the Company's $500 million commercial paper program.

At December 31, 2022, the Company had approximately $227 million in cash and cash equivalents on hand and $750 million in committed availability under its revolving credit facility, all of which was available for drawdown.

The Company has the contractual right to draw funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market.

As of December 31, 2022, the Company had scheduled debt maturities of $502.4 million, $15.0 million, $715.3 million, $14.6 million, and $302.0 million in 2023, 2024, 2025, 2026, and 2027, respectively.

See Note 9 to the Consolidated Financial Statements for additional information regarding the Company's contractual principal debt maturities.

The Company's contractual obligation maturities for interest payments on outstanding fixed-rate, long-term debt, as well as financing fees on the backstop line of credit, are expected to total approximately $78.8 million in both 2023 and 2024, $72.2 million in 2025, $71.6 million in 2026, and $64.9 million in 2027.

Capital spending is expected to total approximately $350 million in 2023, slightly higher than 2022, due to anticipated capital investments in our Consumer Packaging segment, including Metal Packaging, which will more than offset the impact of the completion of spending on Project Horizon in 2022.

Consistent with its past practice, the Company expects to continue investing in its capital assets in subsequent periods but does not currently have significant contractual commitments.

Acquisitions and internal investments are key elements of the Company’s growth strategy.

The Company believes that its cash on hand, coupled with cash generated from operations and available borrowing capacity will enable it to support this strategy.

Although the Company believes that it has excess borrowing capacity beyond its current lines, there can be no assurance that such financing would be available or available on terms that are acceptable to the Company.

Although the Company believes that it has excess borrowing capacity beyond its current lines of credit, there can be no assurance that such financing would be available or available on terms that are acceptable to the Company.

Should these efforts result in the future sale of any plants or business units, management expects to first seek to utilize the proceeds to invest in growth projects or strategic acquisitions.

Should these efforts result in the future sale of any plants or business units, management expects to utilize the proceeds to pay down debt and/or invest in growth projects or strategic acquisitions.

The net underfunded position of the Company’s various U.S and international defined benefit pension and postretirement plans was $98 million at the end of 2022, compared with $97 million at the end of 2021.

The decrease of $197 million reflects the final settlement of the liabilities of the Inactive Plan during 2021.

The Inactive Plan was terminated effective September 30, 2019, and the liabilities settled through a combination of a limited lump-sum offering in April 2021 and annuity purchases in June 2021.

The Company contributed approximately $164 million to its benefit plans in 2021, including $124 million to the Inactive Plan in order to be fully funded on a termination basis at the time of the annuity purchase.

The Company realized a cash tax benefit of approximately $38 million in 2020 on the Inactive Plan contributions that were deductible in its 2020 income tax filings.

Contributions to the Company's benefit plans in 2022, including the Sonoco Retirement Contribution ("SRC"), are expected to total approximatel y $38 million.

The Company contributed approximately $37 million to its benefit plans in 2022, including a $22 million contribution to the Sonoco Retirement Contribution ("SRC").

Benefit plan contributions in 2023 are expected to total approximately $15 million.

Future funding requirements will depend largely on actual investment returns, future actuarial assumptions, legislative actions, and changes to the Company's benefit offerings.

In October 2021, the Company's Board of Directors approved an amendment to the Sonoco Retirement and Savings Plan to eliminate the SRC and to increase the Company's 401(k) matching contribution to 100% of the first 6% of eligible contributions effective as of December 31, 2021.

The amendment is expected to be neutral to total expense in 2022.

However, the Company's operating cash flow is expected to be negatively affected in 2022 as it will reflect both the annual funding of the SRC earned in 2021 and the higher 401(k) matching contributions.

Total equity decreased $61 million during 2021 as other comprehensive income of $397 million and stock-based compensation of $23 million were offset by a net loss of $83 million, dividends of $180 million and share repurchases of $218 million.

The primary components of other comprehensive income were a $76 million translation loss from the impact of a stronger U.S.

dollar on the Company’s foreign investments and the reclassification of actuarial losses in the Company’s defined benefit plans totaling $471 million, net of tax, from accumulated other comprehensive loss to net income, primarily relating to the settlement of the Inactive Plan in the second quarter of 2021.

As previously disclosed, the Sonoco Retirement and Savings Plan was amended in the prior year to eliminate the SRC and to increase the Company's 401(k) matching contribution to 100% of the first 6% of eligible contributions effective as of December 31, 2021.

The amendment was neutral to total expense in 2022;

however, operating cash flow was negatively affected in 2022 as it reflected both the annual funding of the SRC earned in 2021 and the higher 401(k) matching contributions.

Total equity increased $223 million during 2022 as net income of $467 million and stock-based compensation of $31 million were partially offset by other comprehensive loss of $70 million, dividends of $188 million, the purchase of a noncontrolling interest of $13 million, and share repurchases of $5 million for tax share withholdings on vested stock compensation granted to employees.

The primary driver of other comprehensive loss was a $69 million translation loss from the impact of a stronger U.S.

dollar on the Company’s foreign investments.

On April 20, 2021, the Company’s Board of Directors authorized the repurchase of the Company's common stock up to an aggregate amount of $350 million.

The Company purchased a total of 3.29 million shares under this authorization during 2021 at a cost of $212 million.

Accordingly, a total of $138 million remained available for share repurchases under this authorization at December 31, 2021.

No shares were repurchased under this authorization during 2022;

accordingly, a total of $138 million remains available for share repurchases at December 31, 2022.

Although the ultimate determination of whether to pay dividends is within the sole discretion of the Board of Directors and is based on a variety of factors, the Company plans to continue paying dividends consistent with historical practice as earnings and the Company's liquidity permit.

Dividends per common sh are were $1.80 i n 2021, $1.72 in 2020 and $1.70 in 2019.

Dividends per common share were $1.92 in 2022, $1.80 in 2021 and $1.70 in 2020.

On February 8, 2023, the Company declared a regular quarterly dividend of $0.49 per common share payable on March 10, 2023, to shareholders of record on February 22, 2023.

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Leased assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Most real estate leases, in particular, include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years.

Most real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five years.

For additional information regarding the Company's contractual lease obligations, see Note 7 to the Consolidated Financial Statements.

As of December 31, 2021, the Company had long-term obl igations to purchase electricity and steam, which it uses in its production processes, as well as long-term purchase commitments for certain raw materials, principally old corrugated containers.

As of December 31, 2022, the Company had long-term obligations to purchase electricity and steam, which it uses in its production processes, as well as long-term purchase commitments for certain raw materials, principally old corrugated containers.

For additional information regarding the Company's purchase commitment obligations, see Note 16 to the Consolidated Financial Statements.

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The Company’s foreign operations are exposed to political, geopolitical, and cultural risks, but the risks are mitigated by diversification and the relative stability of the countries in which the Company has significant operations.

30 FORM 10-K SONOCO 2022 ANNUAL REPORT

Due to the highly inflationary economy in Venezuela, the Company considers the U.S.

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At December 31, 2022 , the carrying value of the Company's net investment in its Venezuelan operations was approximately $2.1 million.

In addition, at December 31, 2021, the Company's Accumulated Other Comprehensive Loss included a cumulative translation loss of $3.8 million related to its Venezuela operations which would need to be reclassified to net income in the event of a complete exit of the business or a deconsolidation of these operations.

The Company has operations in the United Kingdom and elsewhere in Europe that had the potential to be impacted by the exit of the U.K.

from the European Union (Brexit) at the end of January 2020 and the new E.U.-U.K.

Trade and Cooperation Agreement which went into effect December 31, 2020.

operations developed contingency plans regarding potential customs clearance issues, tariffs and other uncertainties resulting from Brexit and the new agreement with the European Union.

Although it is difficult to predict all of the possible future impacts to our supply chain or in our customers' downstream markets, the operational impacts subsequent to Brexit have been minor.

The Company has evaluated the future potential operational impacts and uncertainties of Brexit and continues to believe that the likelihood of a material impact on our future results of operations is low.

Although there are some cross-border sales made out of and into the U.K., most of what the Company produces in the U.K.

is also sold in the U.K.

and the same is true for continental Europe.

In some cases, companies that have been

31 FORM 10-K SONOCO 2021 ANNUAL REPORT

importing from Europe into the U.K.

are now seeking local sources, which has actually been positive for our U.K.

Our annual revenue in 2021 for our U.K.

businesses totaled approximately $144 million on a standalone basis.

Although Brexit could have broad-reaching effects beyond just in the U.K.

itself, we believe our exposure to this uncertainty is limited.

In addition, at December 31, 2022 , the Company's accumulated other comprehensive loss included a cumulative translation loss of approximately $3.8 million related to its Venezuela operations which would need to be reclassified to net income in the event of a complete exit of the business or a deconsolidation of these operations.

During the first quarter of 2022, the three-year cumulative rate of inflation in Turkey rose above 100 percent, the threshold at which it is deemed to be a highly inflationary economy under U.S.

Accordingly, effective as of the beginning of the second quarter of 2022, the Company considers the U.S.

dollar to be the functional currency of its operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S.

dollars with changes recorded through earnings.

The impact of applying highly inflationary accounting to Turkey was a pretax charge to earnings of approximately $2.7 million (approximately $2.1 million after tax) in 2022.

The magnitude of future earnings impacts is uncertain as such impacts are dependent upon unpredictable movements in the Turkish lira relative to the U.S.

In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges.

However, the Company believes its exposure is limited to its net investment in Turkey which, as of December 31, 2022, was approximately $18.5 million.

The Company is a purchaser of various raw material inputs such as recovered paper, energy, steel, aluminum, and plastic resin.

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On occasion, where the correlation between selling price and input price is less direct, the Company may enter into derivative contracts such as futures or swaps to manage the effect of price fluctuations.

In addition, the Company may, from time to time, use traditional, unleveraged interest-rate swaps to manage its mix of fixed and variable rate debt and to control its exposure to interest rate movements within select ranges.

At December 31, 2021, the Company had derivative contracts outstanding to hedge the price on a portion of anticipated natural gas purchases.

These contracts, which qualify as cash flow hedges, included natural gas swaps covering approximately 1.7 million metric million British thermal units ("MMBTUs").

In addition, the Company may occasionally use traditional, unleveraged interest-rate swaps to manage its mix of fixed and variable rate debt and control its exposure to interest rate movements within select ranges.

At December 31, 2022 , the Company had derivative contracts outstanding to hedge the prices on a portion of anticipated natural gas and aluminum purchases.

These contracts, which qualify as cash flow hedges, included natural gas swaps covering approximately 0.2 million metric million British thermal units ("MMBTUs") and aluminum swaps covering 983 metric tons.

In addition, at December 31, 2022 , the Company had certain other commodity contracts outstanding to manage the cost of anticipated natural gas purchases for which the Company does not apply hedge accounting.

These contracts consist of natural gas swaps covering approximately 7.3 million MMBTUs.

The Company's designated and non-designated natural gas derivative contracts total approximately 73% of anticipated natural gas usage in North America for 2022.

The Company routinely enters into forward contracts to economically hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables.

The Company's combined designated and non-designated derivative contracts totaled approximately 70% and 13% of anticipated natural gas and aluminum usage, respectively, in North America for 2023.

The Company routinely enters into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending.

For such contracts that are designated and qualify as a cash flow hedge under Accounting Standards Codification ("ASC") 815, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the periods during which the hedged transaction affects earnings.

At December 31, 2022, the total notional amount of these contracts, in U.S.

dollar terms, was $110 million, of which $28 million related to the Mexican peso, $27 million to the Polish zloty, $25M to the Canadian dollar, $11 million to the Euro, $7 million to the British pound, $6 million to the Colombian peso, and $6 million to all other currencies.

The Company also routinely enters into forward contracts to economically hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables.

The Company does not apply hedge accounting treatment under ASC 815 for these instruments.

As such, changes in fair value are recorded directly to income and expense in the periods that they occur.

At December 31, 2021, the total notional amount of these contracts, in U.S.

dollar terms, was $81 million, of which $13 million related to the Canadian dollar, $24 million to the Mexican peso, $23 million to the Polish Zloty, $7 million to the Colombian Peso, $9 million to the Euro and $5 million to all other currencies.

On January 21, 2022, the Company completed a registered public offering of unsecured bonds including $500 million aggregate principal amount of 2.850% Notes due 2032 (the"2032 Notes"), maturing on February 1, 2032.

On December 29, 2021, the Company entered into treasury lock derivative instruments with two banks, with a notional principal amount of $150 million each, with the risk management objective of reducing the Company's exposure to increases in the underlying Treasury index up to the date of pricing of the 2032 Notes.

The fair value of the contracts was a net loss position of $(0.6) million at December 31, 2021.

The derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5.2 million.

The total fair market value of the Company's derivatives was a net favorable pos ition of $1.5 million and $0.6 million a t December 31, 2021 and December 31, 2020, respectively.

The total fair market value of the Company's derivatives was a net unfavorable pos ition of $(9.3) million at December 31, 2022, and a net favorable position of $1.5 million a t December 31, 2021 .

Derivatives are marked to fair value using published market prices, if available, or using estimated values based on current price quotes and a discounted cash flow model.

See Note 10 to the Consolidated Financial Statements for more information on financial instruments.

As a result of the weakening global economy due to the COVID-19 pandemic, the Company increased its allowance for cumulative expected credit losses by $0.4 million and $0.3 million during 2021 and 2020, respectively.

Continued weakness in the economy may require additional charges to be recognized in future periods.

The Company is subject to various federal, state and local environmental laws and regulations in the United States and in each of the countries where we conduct business, concerning, among other matters, solid waste disposal, wastewater effluent and air emissions.

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These regulatory actions and a small number of private party lawsuits are believed to represent the Company’s largest potential environmental liabilities.

The Company has accrued $7.4 million at December 31, 2021, compared with $8.1 million at December 31, 2020, with respect to these sites.

See “Environmental Charges,” Item 3 – Legal Proceedings and Note 16 to the Consolidated Financial Statements for more information on environmental matters.

The Company has accru ed $7.3 million at December 31, 2022, compared with $7.4 million at December 31, 2021, with respect to these sites.

See “Environmental Charges” in Item 3 – Legal Proceedings and Note 16 to the Consolidated Financial Statements for more information on environmental matters.

Critical Accounting Policies and Estimates

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If we are required to adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.

Significant estimates and assumptions in estimating the fair value of acquired customer relationships, technology, and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.

In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense.

If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.

Projecting discounted future cash flows requires the Company to make significant estimates regarding projected revenues, projected earnings before interest, taxes, depreciation, and amortization margins, discount rates and customer attrition rates.

In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense on definite lived intangible assets.

If the estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could become impaired.

For leases in which the acquired business is a lessee, the Company measures the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the Company at the acquisition date.

The Company measures the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.

Impairment of Long-Lived, Intangible and Other Assets

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If the carrying value of a reporting unit exceeds the fair value of that reporting unit, an impairment charge to goodwill is recognized for the excess.

The Company's reporting units are the same as, or one level below, its operating segments, as determined in accordance with ASC 350.

The Company's reporting units are the same as, or one level below, its operating segments, as determined in accordance with Accounting Standards Codification 350 - "Intangibles-Goodwill and Other."

The Company completed its most recent annual goodwill impairment testing during the third quarter of 2022.

For testing purposes, the Company performed an assessment of each reporting unit using either a qualitative evaluation or a quantitative test.

The qualitative evaluations considered factors such as the macroeconomic environment, Company stock price and market capitalization movement, current year operating performance as compared to prior projections, business strategy changes, and significant customer wins and losses.

The quantitative tests, described further below, relied on the current outlook of reporting unit management for future operating results and took into consideration, among other things, the expected impact of the COVID-19 pandemic on future operations, specific business unit risk, the countries in which the reporting units operate, and implied fair values based on comparable trading multiples.

The qualitative evaluations considered factors such as the macroeconomic environment, the industry, the Company's overall financial performance, the current and projected financial performance of specific reporting units, and business strategy changes.

The quantitative tests, described further below, relied on the current outlook of reporting unit management for future operating results and took into consideration, among other things, specific business unit risk, the countries in which the reporting units operate, and implied fair values based on comparable tra ding multiples.

When performing a quantitative analysis, the Company estimates the fair value of its reporting units using a discounted cash flow model based on projections of future years’ operating results and associated cash flows.

The Company's assessments reflected a number of significant management assumptions and estimates including the Company's forecast of sales grow th, gross profit margins and discount rates, which are validated by observed comparable trading and transaction multiples based o n guideline public companies.

The Company's assessments reflect significant management assumptions and estimates related to the Company's forecast of sales growth, gross profit margins and discount rates, which are validated by observed comparable trading and transaction multiples based on guideline public companies.

The Company’s model discounts projected future cash flows, forecasted over a seven-year period, with an estimated residual growth rate.

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Therefore, should there be changes in the relevant facts and circumstances and/or expectations, management’s conclusions regarding goodwill impairment may change as well.

Management’s projections related to revenue growth and/or margin improvements are based on a combination of factors, including expectations for volume growth with existing customers and customer retention, product expansion, changes in price/cost relationships, productivity gains, fixed cost leverage, and stability or improvement in general economic conditions.

In considering the level of uncertainty regarding the potential for goodwill impairment, management has concluded that any such impairment would, in most cases, likely be the result of adverse changes in more than one assumption.

Management considers the assumptions used to be its best estimates across a range of possible outcomes based on available evidence at the time of the assessment.

Other than in Plastics - Healthcare, which is discussed below, there is no specific singular event or single change in circumstances management has identified that it believes could reasonably result in a change to expected future results in any of its reporting units sufficient to result in goodwill impairment.

Other than in Plastics - Healthcare and Protexic reporting units, which are discussed below, there is no specific singular event or single change in circumstances management has identified that it believes could reasonably result in a change to expected future results in any of its reporting units sufficient to result in goodwill impairment.

In management’s opinion, a change of such magnitude would more likely be the result of changes to some combination of the factors identified above, a general deterioration in competitive position, introduction of a superior technology, significant unexpected changes in customer preferences, an inability to pass through significant raw material cost increases, and other such items as identified in "Item 1A.

Risk Factors" in this Annual Report on Form 10-K.

Although no reporting units failed the annual impairment test, in management’s opinion, the goodwill of the Plastics - Healthcare reporting unit is at risk of impairment in the near term if the reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

32 FORM 10-K SONOCO 2022 ANNUAL REPORT

Although beginning to benefit from the economic recovery, the results of the Plastics – Healthcare reporting unit have been negatively impacted by end-market weakness due to the COVID-19 pandemic.

In addition, the unit is facing near-term headwinds from higher raw material and other cost increases.

Assuming COVID-19 infection rates continue to decline, management expects market demand will improve over the coming year and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation.

However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, or profit margins do not improve as expected, goodwill impairment charges may be possible in the future.

Total goodwill associated with the Plastics – Healthcare reporting unit was $64.3 million at December 31, 2021.

Based on the most-recent annual impairment test, the estimated fair value of the Plastics – Healthcare reporting unit exceeded its carrying value by 13.3%.

Although no reporting units failed the annual impairment test, in management’s opinion, the goodwill of the Plastics - Healthcare and the Protexic reporting units are at risk of impairment in the near term if each reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

Sensitivity Analysis

In its 2021 annual goodwill impairment analysis, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 8.3%.

Based on the discounted cash flow model and holding other valuation assumptions constant, projected operating profits across all future periods would have to be reduced approximately 13.0%, or the discount rate increased to 9.3%, in order for the estimated fair value of the reporting unit to fall below its carrying value.

In its 2022 annual goodwill impairment analysis, projected future cash flows for the Plastics - Healthcare and Protexic reporting units were discounted at 9.8% and 9.5%, respectively, and their estimated fair values were determined to exceed their carrying values by approximately 18.0% and 18.3%, respectively.

Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rates for the Plastics - Healthcare and Protexic reporting units would have to be increased to 11.0% and 11.5%, respectively, in order for the estimated fair values of the reporting units to fall below their carrying values.

Total goodwill associated with the Plastics - Healthcare and Protexic reporting units was $62.6 million and $29.1 million, respectively, at December 31, 2022.

The Company follows ASC 740, Accounting for Income Taxes, which requires a reduction of the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not such assets will not be realized.

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• Return on invested capital — three-year simple average calculated using the annual returns calculated by dividing 1) net base operating profit after tax (derived from historical or projected base earnings) by 2) the average of total historical or projected debt plus equity for the respective annual periods.

• Return on net assets employed — three-year simple average calculated using the annual returns calculated by dividing 1) net base operating profit after tax (derived from historical or projected base earnings) by 2) the average of total historical or projected net assets for the respective annual periods.

Changes in estimates regarding the future achievement of these performance measures may result in significant fluctuations from period to period in the amount of share-based compensation expense reflected in the Company’s Consolidated Financial Statements.

Changes in estimates regarding the future achievement of these performance measures may result in significant fluctuations from period to period in the amount of share-based compensation expense recognized in the Company’s Consolidated Financial Statements.

Pension and Postretirement Benefit Plans

The Company has significant pension and postretirement benefit liabilities and costs that are measured using actuarial valuations.

The largest of the Company's pension plans are the U.S.-based Sonoco Pension Plan (the "Active Plan") and the Inactive Plan.

On July 17, 2019, the Company's Board of Directors approved the termination of the Inactive Plan effective September 30, 2019.

Following completion of a limited lump-sum offering in the second quarter of 2021, the Company settled all remaining liabilities under the Inactive Plan in June 2021 through the purchase of annuities.

The largest of the Company's pension plans are the U.S.-based Sonoco Pension Plan (the "Active Plan") and the Sonoco U.K.

Retirement Benefits Plan (the "U.K.

Other significant benefit plans include the U.S.

Retirement and Retiree Health and Life Insurance Plan and the U.S.

nonqualified retirement plans.

During 2022, the Company recorded total pension and postretirement benefit expenses of approximately $10.7 million, compared with $595.6 million during 2021, a reduction of $584.9 million.

The year-over-year decrease was due primarily to the previously disclosed settlement of the Company's Inactive Plan liabilities in the second quarter of 2021.

Charges in 2022 reflect $10.7 million of expected returns on plan assets at an average assumed rate of 3.03% and interest cost of $10.8 million at a weighted-average discount rate of 2.55%.

Pension and postretirement benefit expense in 2021 reflects $23.3 million of expected returns on plan assets at an average assumed rate of 3.61% and interest cost of $24.4 million at a weighted-average discount rate of 2.43%.

Settlement charges totaling $550.7 million were recognized in 2021, primarily related to the settlement of all remaining liabilities under the Inactive Plan in June 2021 through the purchase of annuities.

The Company projects that total benefit plan expenses will be approximately $15 million in 2023, approximately $5 million higher than in 2022, due primarily to an increase in interest costs stemming from higher discount rates.

Cumulative net actuarial losses decreased slightly from $105 million at December 31, 2021 to $103 million at December 31, 2022, as the favorable impact of higher year-over-year discount rates and ongoing amortization of actuarial losses was partially offset by additional actuarial losses stemming from lower-than-expected asset returns on the U.K.

Remaining actuarial losses/gains outside of the 10% corridor defined by U.S.

GAAP are amortized over the average remaining service life of the plan’s active participants or the average remaining life expectancy of the plan’s inactive participants if all, or almost all, of the plan’s participants are inactive.

In October 2021, the Sonoco Retirement and Savings Plan was amended to eliminate the SRC and to increase the Company's 401(k) matching contribution to 100% of the first 6% of eligible contributions effective as of December 31, 2021.

The amendment was neutral to total expense in 2022.

However, the Company's operating cash flow was negatively affected in 2022 as it reflected both the annual funding of the SRC earned in 2021 and the higher 401(k) matching contributions.

Contributions to its pension and postretirement plans in 2022 totaled $37.4 million, including an SRC contribution of $21.9 million.

Contributions in 2021 totaled $163.7 million, including contributions of $124.4 million to the Inactive Plan in order to be fully funded on a termination basis at the time the plan was annuitized.

Contributions to the Company's benefit plans in 2023 are expected to total approximately $15 million.

Future funding requirements will depend largely on actual investment returns, future actuarial assumptions, legislative actions, and changes to the Company's benefit offerings.

33 FORM 10-K SONOCO 2022 ANNUAL REPORT

The actuarial valuations used to evaluate the plans employ key assumptions that can have a significant effect on the calculated amounts.

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retirement and retiree health and life insurance plans include:

discount rates of 3.05% for the Active Plan, 2.66% for the Company's non-qualified retirement plans, and 2.48% for the Company's retiree health and life insurance plan.

The rate of compensation increase for the retiree health and life insurance plan was 3.01%.

discount rates of 5.10% for the Active Plan, 4.97% for the Company's non-qualified retirement plans, 4.92% for the Company's retiree health and life insurance plan, and 4.80% for the U.K.

The rate of compensation increase was 2.99% for the retiree health and life insurance plan and 3.75% for the U.K.

The key assumptions used to determine the 2022 net periodic benefit cost for U.S.

retirement and retiree health and life insurance plans include:

discount rates of 2.75% and 2.31% for the Active Plan and Inactive Plan, respectively, 2.28% for the non-qualified retirement plans, and 2.04% for the retiree health and life insurance plan;

an expected long-term rate of return on plan assets of 3.27% for the Active Plan and 2.01% for the Inactive Plan;

and a rate of compensation increase for the retiree health and life insurance plan of 3.03%.

During 2021, the Company recorded total pension and postretirement benefit expenses of approximately $595.6 million, compared with $58.0 million during 2020.

The 2021 amount reflects non-cash settlement charges of $550.7 million, primarily related to the settlement of the Inactive Plan's liabilities.

Absent the settlement charges, total pension and postretirement benefit expenses were approximately $13.1 million lower

year over year.

Charges in 2021 reflect $23.3 million of expected returns on plan assets at an average assumed rate of 3.61% and interest cost of $24.4 million at a weighted-average discount rate of 2.43%.

The 2020 amount reflects $51.1 million of expected returns on plan assets at an average assumed rate of 3.18% and interest cost of $51.6 million at a weighted-average discount rate of 2.76%.

During 2021, the Company made contributions to its pension and postretirement plans of $163.7 million, including $124.4 million to the Inactive Plan in order to be fully funded on a termination basis at the time annuity purchases were made.

Contributions in 2020 totaled $40.4 million.

Contributions vary from year

34 FORM 10-K SONOCO 2021 ANNUAL REPORT

to year depending on various factors, the most significant being the market value of assets and interest rates.

Cumulative net actuarial losses, principally the result of low discount rates, decreased from $736 million at December 31, 2020 to $105 million at December 31, 2021, primarily due to the settlement of the Inactive Plan during 2021.

Remaining actuarial losses/gains outside of the 10% corridor defined by U.S.

The Company projects that total benefit plan expenses will be approximately $8 million in 2022, $588 million lower than in 2021.

This decrease is due primarily to the settlement of the Inactive Plan.

Contributions to the Company's benefit plans in 2022, including the Sonoco Retirement Contribution ("SRC"), are expected to total approximatel y $38 million.

Future funding requirements will depend largely on actual investment returns, future actuarial assumptions, legislative actions, and changes to the Company's benefit offerings.

The amendment is expected to be neutral to total expense in 2022.

discount rates of 3.05% for the Active Plan, 2.66% for the non-qualified retirement plans, 2.48% for the retiree health and life insurance plan, and 1.95% for the U.K.

an expected long-term rate of return on plan assets of 3.27% for the Active Plan and 2.90% for the U.K.

and a rate of compensation increase of 3.01% and 3.65% for the retiree health and life insurance plan and U.K.

Plan, respectively.

The Company adjusts its discount rates at the end of each fiscal year based on yield curves of high-quality debt instruments over durations that match the expected benefit payouts of each plan.

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Higher/(Lower)

Discount rate -.25 pts $5.9 $0.3

Expected return on assets -.25 pts N/A $0.1

Discount rate 0.25% decrease $3.8 $0.2

Expected return on assets 0.25% decrease N/A $0.1

Other assumptions and estimates impacting the projected liabilities of these plans include inflation, participant withdrawal and mortality rates and retirement ages.

The Company evaluates the assumptions used in projecting the pension and postretirement liabilities and associated expense annually.

The Company evaluates the assumptions used in projecting the pension and postretirement liabilities and associated expenses annually.

These judgments, assumptions and estimates may affect the carrying value of pension and postretirement plan net assets and liabilities and pension and postretirement plan expenses in the Company’s Consolidated Financial Statements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis