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Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-02-28 · 425 added, 348 removed, 255 unchanged (75% 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 310 locations in 32 countries as of December 31, 2022 .

Sonoco is a multi-billion dollar global designer, developer, and manufacturer of a variety of highly-engineered and sustainable packaging serving multiple end markets.

As of December 31, 2023, the Company had approximately 310 locations in 33 countries, serving some of the world’s best-known brands in some 85 nations.

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.

Geographically, in 2023, approximately 71% of sales were generated in the United States, 14% in Europe, 5% in Asia, 3% in Canada, and 7% in other regions.

Sonoco’s goal 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'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.

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

The Company's primary focus areas in 2023 were to continue to focus on improving returns on promising organic investments and acquisitions to better manage our business mix, improve profits, improve generation of operating cash flow and free cash flow, and operate the business with better efficiency.

Another focus area in 2023 was the Company’s continued commitment to promote accountability and transparency in its sustainability and corporate responsibility programs.

On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock Company (“WestRock”) and the acquisition of a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”) from WestRock.

These acquisitions further strengthened and expanded the Company’s 100% recycled fiber-based packaging solutions to serve consumer wine, spirits, food, beauty and healthcare markets.

On December 1, 2023, the Company completed the acquisition in Brazil of Inapel, significantly expanding the Company’s presence in the flexible packaging services market in Latin America.

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.

See “Acquisitions and Divestitures—Acquisitions” below for more information.

The Company made other changes in its portfolio in 2023 including the sales of its U.S.

and Mexico BulkSak businesses and its S3 business.

The Company also sold approximately 55,000 acres of timberland properties as we now produce paper exclusively from recycled fiber and no longer require natural tree fiber for production.

In January 2024, the Company entered into a definitive agreement to sell its Protective Solutions business, part of the All Other group of businesses, to Black Diamond Capital Management, LLC.

These actions were the result of Sonoco’s continuing evaluation of its business portfolio and were consistent with the Company’s strategic and investment priorities.

23 FORM 10-K SONOCO 2023 ANNUAL REPORT

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.

The Company also continued efforts to improve productivity through focus on operational excellence including the implementation of automation programs and commercial excellence where we are realigning pricing models to value versus legacy cost-based inputs.

The results of these efforts reflected positively in the Company's 2023 financial results.

As the Company looks to 2024, we expect year-over-year sales to be up modestly and year-over-year price/cost impacts to be negative.

We intend to aggressively manage costs and generate positive productivity while navigating global volume uncertainties.

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.

We remain focused on executing strategic initiatives to simplify our portfolio and capture synergies from our recent acquisitions to advance Sonoco through 2024 and beyond.

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.

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;

To assess and communicate the financial performance of the Company, Sonoco’s management uses, both internally and externally, certain financial performance measures that are not in conformity with GAAP.

These “non-GAAP” financial measures (referred to as “Adjusted”) reflect adjustments to the net income attributable to the Company (“GAAP results”) to exclude amounts, including the associated tax effects, relating to:

• restructuring/asset impairment charges 1 ;

• acquisition, integration and divestiture-related costs;

• gains or losses from the divestiture of businesses and other assets;

• losses from the early extinguishment of debt;

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• 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.

• derivative gains/losses;

• other non-operating income and losses;

• certain other items, if any.

1 Restructuring and restructuring-related asset impairment charges are a recurring item as the Company’s restructuring programs usually 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.

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

Non-GAAP figures previously identified by the term “Base” are now identified using the term “Adjusted,” for example, “Adjusted Operating Profit,” “Adjusted Net Income” (referred to as “Adjusted Earnings”), and Adjusted Diluted Earnings Per Share (referred to as “Adjusted EPS”).

In addition to the “Adjusted” results described above, the Company also uses Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA is defined as net income excluding the following:

interest expense;

interest income;

provision for income taxes;

depreciation, depletion and amortization expense;

non-operating pension costs;

net income attributable to noncontrolling interests;

restructuring/asset impairment charges;

changes in LIFO inventory reserves;

gains/losses from the divestiture of businesses and other assets;

other income;

acquisition, integration and divestiture-related costs;

derivative gains/losses;

and other non-GAAP adjustments, if any, that may arise from time to time.

Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales.

The Company’s non-GAAP financial measures are not calculated in accordance with, nor are they an alternative for, measures conforming to GAAP, and they 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.

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

The Company consistently applies its non-GAAP financial 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 plans/forecasts.

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 be comparable with similarly named financial measures of other companies.

Material limitations associated with the use of such measures include 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.

Similarly, non-operating pension expense is a recurring item.

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 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.

To compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in evaluating the Company’s results to review both GAAP information, which includes all of the items impacting financial results, and the related non-GAAP financial measures that exclude certain elements, as described above.

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

Whenever reviewing a non-GAAP financial measure, investors are encouraged to review the related reconciliation to understand how it differs from the most directly comparable GAAP measure.

Reconciliations of GAAP to Non-GAAP 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.

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.

possible gains or losses on the sale of businesses or other assets;

restructuring costs and restructuring-related asset impairment charges;

acquisition, integration and 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.

Acquisitions and Divestitures

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.

24 FORM 10-K SONOCO 2023 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.

Acquisitions and Divestitures

The Company completed two acquisitions during 2023 at a net cash cost of approximately $372.6 million.

On December 1, 2023, the Company completed the acquisition of Inapel, a manufacturer of single-layer and multilayer materials for flexible packaging in Brazil for a net cash purchase price of $59.2 million, subject to customary working capital adjustments.

With the acquisition of Inapel, the Company added approximately 500 employees and two manufacturing locations in the Sao Paulo region of Brazil.

The acquisition significantly expanded the Company’s presence in the flexible packaging services market in Latin America.

On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock, and the acquisition of the Chattanooga Mill from WestRock for net cash consideration of $313.4 million, subject to a final working capital adjustment of $0.5 million that was paid to WestRock in January 2024.

Prior to completing the acquisitions, the Company held a 35% ownership interest in the RTS Packaging joint venture, which was formed in 1997, and combined the former protective packaging operations of WestRock and Sonoco to market recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals.

With the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill, the Company added approximately 1,100 employees, fourteen converting operations, including ten in the United States, two in Mexico, two in South America, and one paper mill in the United States.

On January 30, 2024, the Company entered into a definitive agreement to sell its Protective Solutions business, part of the All Other group of businesses, to Black Diamond Capital Management, LLC for an estimated $80.0 million in cash.

The transaction is expected to be completed in the first half of 2024, subject to the satisfaction or waiver of customary closing conditions.

This business provides foam components and integrated material solutions for various industrial end markets.

The business operates nine manufacturing facilities and has approximately 900 employees.

This sale is the result of Sonoco’s continuing evaluation of its business portfolio and is consistent with the Company’s strategic and investment priorities.

On July 1, 2023, the Company completed the sale of its U.S.

BulkSak business, which consisted of the manufacturing and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners and was a part of the Company’s Industrial Paper Packaging segment, to U.S.

BulkSak Holdings, LLC.

The cash selling price, as adjusted for the final working capital settlement, was $20.3 million with cash proceeds totaling $18.3 million received in 2023, and the remaining $2.0 million held in escrow to be released to the Company within 18 months from the date of the sale, pursuant to the settlement of any indemnity claims.

As a result of the U.S.

BulkSak divestiture, the Company recognized a pretax gain of $6.8 million included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.

Also on July 1, 2023, the Company agreed to the sale of its Mexico BulkSak business.

The sale closed in December 2023 for a cash selling price, as adjusted for working capital, of $1.1 million.

As a result of the Mexico BulkSak sale, the Company recognized a pretax gain of $0.1 million which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.

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 Co.

(“Northstar”), for total cash proceeds of $13.8 million.

An additional $1.5 million of proceeds are being held in escrow and will be released to the Company twenty months following the date of the divestiture, pursuant to any indemnification claims.

The Company recognized a pretax gain of $11.1 million during the first quarter of 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income and is entitled to receive additional proceeds of $3.2 million in the second quarter of 2024 if certain conditions are met.

This contingent consideration will be recognized as an additional gain on the sale at the point the contingencies are resolved.

On January 26, 2023, in connection with the sale of the S3 business, the Company acquired a 2.7% equity interest in Northstar valued at $5.0 million.

This investment is being accounted for under the measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes).

Sale of Assets

Following the completion of Project Horizon in the third quarter of 2022, the Company’s project to convert the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard, the Company now produces paper exclusively from recycled fibers and no longer requires natural tree fiber for production.

Accordingly, on March 29, 2023, the Company sold its timberland properties, consisting of approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of $70.8 million.

The Company disposed of assets with a net book value of $9.9 million as part of the sale, and recognized a pretax gain from the sale of these assets of $60.9 million during the year ended December 31, 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.

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.

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During 2023, 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.

The largest of these plant closures was the closure of the Company’s paper mill in Hutchinson, Kansas, which was part of the Industrial Paper Packaging segment.

Restructuring charges were also incurred during the year for 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.

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.

Asset impairment charges were recognized in the Industrial Paper Packaging and Consumer Packaging segments as the result of plant closures.

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.

In addition, the Company recognized gains from the sale of real estate in the Industrial Paper Packaging segment and gains from the sale of other assets impaired in the prior year as a result of consolidations in the Company's Plastics - Food thermoforming operations.

The Company recognized other asset impairment charges totaling $5.0 million in the year ended December 31, 2021.

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.

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

The Company expects to recognize future additional costs totaling approximatel y $2.3 million in connection with previously announced restructuring actions that were underway as of December 31, 2023.

The Company believes that the majority of these charges will be incurred and paid by the end of 2024 .

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Reconciliations of GAAP to Non-GAAP Financial Measures

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures for each of the years presented:

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures for each of the years presented in conjunction with management's analysis of the Company’s results of operations:

Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Earnings Attributable to Sonoco, and Adjusted EPS

For the year ended December 31, 2023

Dollars and shares in thousands, except per share data GAAP Restructuring/

Impairment (1)

Dollars in thousands, except per share data

Operating Profit Income Before Income Taxes Provision for Income Taxes Net Income Attributable to Sonoco

As Reported (GAAP) $ 715,790 $ 614,832 $ 149,278 $ 474,959 $ 4.80

Acquisition, integration and divestiture-related costs 26,254 26,254 6,407 19,847 0.20

Changes in LIFO inventory reserves (11,817) (11,817) (2,977) (8,840) (0.09)

Amortization of acquisition intangibles 87,264 87,264 21,523 65,741 0.66

Acquisition/Divestiture

Other Adjustments (4)

Operating profit $ 675,396 $ 56,910 $ 80,427 $ 70,210 $ 36,922 $ 919,865

Restructuring/Asset impairment charges 56,933 56,933 12,920 44,036 0.44

Gain on divestiture of business and other assets (78,929) (78,929) (19,076) (59,853) (0.60)

Other income, net — (39,657) (9,624) (30,033) (0.30)

Non-operating pension costs — 14,312 3,547 10,765 0.11

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

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

Diluted weighted average common shares outstanding:

98,732 98,732

Per diluted common share $ 4.72 $ 0.46 $ 0.62 $ 0.53 $ 0.14 $ 6.48

Net gain from derivatives (1,912) (1,912) (482) (1,430) (0.01)

Other adjustments 10,142 10,113 5,433 4,680 0.05

Total adjustments 87,935 62,561 17,671 44,913 0.46

Adjusted $ 803,725 $ 677,393 $ 166,949 $ 519,872 $ 5.26

26 FORM 10-K SONOCO 2023 ANNUAL REPORT

For the year ended December 31, 2022

Dollars and shares in thousands, except per share data GAAP Restructuring/

Impairment (1)

Dollars in thousands, except per share data

Operating Profit Income Before Income Taxes

Provision for Income Taxes Net Income Attributable to Sonoco

As Reported (GAAP) $ 675,396 $ 571,282 $ 118,509 $ 466,437 $ 4.72

Acquisition, integration and divestiture-related costs 70,210 70,210 17,640 52,570 0.53

Changes in LIFO inventory reserves 28,445 28,445 7,083 21,362 0.22

Amortization of acquisition intangibles 80,427 80,427 19,554 60,873 0.62

Acquisition/Divestiture

Restructuring/Asset impairment charges 56,910 56,910 11,269 45,542 0.46

Non-operating pension costs — 7,073 2,007 5,066 0.05

Net loss from derivatives 8,767 8,767 2,183 6,584 0.07

Other adjustments (290) (426) 18,515 (18,941) (0.19)

Operating profit $ 486,853 $ 14,210 $ 49,419 $ 17,722 $ (3,420) $ 564,784

Total adjustments 244,469 251,406 78,251 173,056 1.76

Adjusted $ 919,865 $ 822,688 $ 196,760 $ 639,493 $ 6.48

Adjusted EBITDA and Adjusted EBITDA Margin

For the Year Ended December 31,

Dollars in thousands 2023 2022

Net income attributable to Sonoco $ 474,959 $ 466,437

Interest expense 136,686 101,662

Interest income (10,383) (4,621)

Provision for income taxes 149,278 118,509

Depreciation, depletion, and amortization 340,988 308,824

Non-operating pension costs 14,312 7,073

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

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

Net income attributable to noncontrolling interests 942 543

Restructuring/Asset impairment charges 56,933 56,910

Changes in LIFO inventory reserves (11,817) 28,445

Gain from divestiture of business and other assets (78,929) —

Other income, net (39,657)

Acquisition, integration and divestiture-related costs 26,254 70,210

Net (gain)/loss from derivatives (1,912) 8,767

Other non-GAAP adjustments 10,142 (290)

Adjusted EBITDA $ 1,067,796 $ 1,162,469

Net Sales $ 6,781,292 $ 7,250,552

Net Income Margin 7.0 % 6.4 %

Adjusted EBITDA Margin 15.7 % 16.0 %

The Company does not calculate net income by segment;

therefore, Adjusted EBITDA by Segment is reconciled to the closest GAAP measure of segment profitability, Segment Operating Profit, which is another method to achieve the same result.

Segment Operating Profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” as prescribed by the Financial Accounting Standards Board.

Segment results, which are reviewed by the Company’s management to evaluate segment performance, do not include the following:

restructuring/asset impairment charges;

amortization of acquisition intangibles;

acquisition, integration, and divestiture-related costs;

changes in LIFO inventory reserves;

gains/losses from the sale of businesses or other assets;

gains/losses on derivatives;

or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business.

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

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

Total operating profit is comprised of the sum of segment and All Other operating profit plus certain items that have been allocated to Corporate, including amortization of acquisition intangibles;

restructuring/asset impairment charges;

changes in LIFO inventory reserves;

acquisition, integration and divestiture-related costs;

gains/losses from the sale of businesses or other assets;

gains/losses on derivatives;

and certain other items that were excluded from segment and All Other operating profit.

27 FORM 10-K SONOCO 2023 ANNUAL REPORT

Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation

For the Year Ended December 31, 2023

Dollars in thousands Consumer Packaging segment Industrial Paper Packaging segment All Other Corporate Total

Segment and Total Operating Profit $ 382,063 $ 317,917 $ 103,745 $ (87,935) $ 715,790

Depreciation, depletion and amortization 1

124,483 104,722 24,519 87,264 340,988

Equity in earnings of affiliates, net of tax 564 9,783 — — 10,347

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) :

Restructuring/Asset impairment charges 2

— — — 56,933 56,933

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

(1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring actions usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency.

(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.

In instances where a company incurs a net loss, including potential common shares in the denominator of a diluted earnings per-share computation will have an antidilutive effect on the per-share loss.

GAAP therefore requires the exclusion of any unexercised share awards or other like instruments for purposes of calculating weighted average shares outstanding.

Accordingly, the Company did not include any unexercised share awards or other like instruments in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in basic weighted average common shares outstanding and diluted weighted average common shares outstanding being the same.

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 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.

Changes in LIFO inventory reserves 3

— — — (11,817) (11,817)

Acquisition, integration and divestiture-related costs 4

— — — 26,254 26,254

Gain from divestiture of business and other assets 5

— — — (78,929) (78,929)

Net gains from derivatives 6

— — — (1,912) (1,912)

Other non-GAAP adjustments 7

— — — 10,142 10,142

Segment Adjusted EBITDA $ 507,110 $ 432,422 $ 128,264 $ — $ 1,067,796

Net Sales $ 3,626,977 $ 2,374,113 $ 780,202

Segment Operating Profit Margin 10.5 % 13.4 % 13.3 %

Segment Adjusted EBITDA Margin 14.0 % 18.2 % 16.4 %

1 Included in Corporate is the amortization of acq uisition intangibles associated with the Consumer Packaging segment of $57,044, the Industrial Paper Packaging segment of $16,121, and All Other of $14,099.

2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $8,059, the Industrial Paper Packaging segment of $38,754, and All Other of $7,623.

3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $(10,915) and the Industrial Paper Packaging segment of $(902).

4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $1,738 and the Industrial Paper Packaging segment of $5,810.

5 Included in Corporate are gains from the sale of the Company’s timberland properties in the amount of $(60,945), the sale of its S3 business in the amount of $(11,065), and the sales of its BulkSak businesses in the amount of $(6,919), all of which are associated with the Industrial Paper Packaging segment.

6 Included in Corporate are gains on derivatives associated with the Consumer Packaging segment of $(257), the Industrial Paper Packaging segment of $(1,290), and All Other of $(365).

7 Included in Corporate are other non-GAAP adjustments associated with the Industrial Paper Packaging segment of $3,762 and the All Other group of businesses of $3,249.

28 FORM 10-K SONOCO 2023 ANNUAL REPORT

Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation

For the Year Ended December 31, 2022

Dollars in thousands Consumer Packaging segment Industrial Paper Packaging segment All Other Corporate Total

Segment and Total Operating Profit $ 526,028 $ 327,859 $ 65,978 $ (244,469) $ 675,396

Depreciation, depletion, and amortization 1

111,599 91,944 24,854 80,427 308,824

Equity in earnings of affiliates, net of tax 485 13,722 — — 14,207

Restructuring/Asset impairment charges 2

— — — 56,910 56,910

Changes in LIFO inventory reserves 3

— — — 28,445 28,445

Acquisition, integration and divestiture-related costs 4

— — — 70,210 70,210

Net losses from derivatives 5

— — — 8,767 8,767

Other non-GAAP adjustments — — — (290) (290)

Segment Adjusted EBITDA $ 638,112 $ 433,525 $ 90,832 $ — $ 1,162,469

Net Sales $ 3,767,956 $ 2,684,563 $ 798,033

Segment Operating Profit Margin 14.0 % 12.2 % 8.3 %

Segment Adjusted EBITDA Margin 16.9 % 16.1 % 11.4 %

1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $55,089, the Industrial Paper Packaging segment of $8,053, and All Other of $17,285.

2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $13,865 and the Industrial Paper Packaging segment of $24,745.

3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $26,753 and the Industrial Paper Packaging segment of $1,692.

4 Included in Corporate are acquisition, integration, and divestiture-related costs associated with the Consumer Packaging segment of $38,690 and the Industrial Paper Packaging segment of $1,885.

5 Included in Corporate are net losses on derivatives associated with the Consumer Packaging segment of $1,230, the Industrial Paper Packaging segment of $5,789, and All Other of $1,748.

Results of Operations – 2023 Versus 2022

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.

These non-base items consisted of the following:

For the year ended

Amounts in Millions December 31, 2022 December 31, 2021

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)

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 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.

Net income attributable to Sonoco (“GAAP results”) were $475.0 million ($4.80 per diluted share) in 2023, compared with $466.4 million ($4.72 per diluted share) in 2022.

GAAP results reflect net after-tax, adjusted charges totaling $44.9 million and $173.1 million in 2023 and 2022, respectively.

These adjustments are presented in the “Reconciliations of GAAP to Non-GAAP Financial Measures” tables.

Adjusted for these items, Adjusted Earnings in 2023 was $519.9 million ($5.26 per diluted share), compared with $639.5 million ($6.48 per diluted share) in 2022.

The GAAP results were slightly higher in 2023 as a result of the full year impact of the acquisition of Metal Packaging, the acquisition of the remaining interest in RTS Packaging, and the acquisition of the Chattanooga Mill, gains from divestitures and sale of assets, and lower acquisition, integration and divestiture-related costs.

These favorable factors were partially offset by lower volumes across the portfolio and unfavorable metal price overlap.

Adjusted Earnings in 2023 declined as a result of lower volumes across the portfolio, inflationary pricing pressure within retail in the Consumer Packaging segment, and unfavorable index-related pricing in the Industrial Paper Packaging segment.

Consolidated net sales for 2023 were $6.8 billion, a $0.5 billion, or 6.5%, decrease from 2022.

The components of the sales change were:

4 unchanged sentences

Foreign currency translation and other, net 15

Total sales increase $ 1,660

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 b y increased sales prices.

Costs and Expenses/Margins

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 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.

Total sales decrease

The lower year-over-year sales were driven by lower volumes across the portfolio and were partially offset by sales from acquisitions.

Volume challenges in the Consumer segment resulted from inflationary pricing pressures within retail.

This impact, along with unfavorable pricing, was partially offset by the full year impact in 2023 of the January 2022 acquisition of Metal Packaging.

Along with unfavorable volume, the Industrial segment was unfavorably impacted by index pricing, partially offset by the impact of the current year acquisitions of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill.

Volume/mix declines in the All Other group of businesses were partially offset by positive pricing.

29 FORM 10-K SONOCO 2023 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.

Total domestic sales were $4.8 billion, down 7.9% from 2022, driven by lower volumes across the portfolio, partially offset by revenue from acquisitions.

International sales were $2.0 billion, down 2.8% from 2022.

Costs and Expenses/Margins

Cost of sales decreased $465.3 million in 2023, or 8.0%, from the prior year.

The decrease was attributable to the lower sales volume, which was partially offset by lower input costs, primarily for steel and old corrugated cardboard.

Gross profit margins increased to 21.2% in 2023 from 19.9% in the prior year primarily due to the previously mentioned lower input costs.

Selling, general and administrative expenses (“SG&A”) increased $34.5 million, or 4.9%, and were 10.9% of sales in 2023 compared to 9.8% of sales in 2022.

The current year increase was related to higher compensation, benefits, group medical, and information technology costs resulting from inflation and the impact of acquisitions.

These increases were partially offset by lower year-over-year acquisition, integration, and divestiture-related costs.

These costs were higher in the prior year due to the January 2022 acquisition of Metal Packaging.

Restructuring and asset impairment charges totaled $56.9 million in both 2023 and 2022.

The 2023 charges reflect the closure costs of several operations, including a paper mill in Kansas, a perimeter-of-the-store facility in California, and medical plastics facilities in the United States and United Kingdom.

The 2022 charges include severance and other plant closure costs as well as a $9.2 million impairment charge resulting from the Company’s exit from its Russian operations.

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

Other income, net was $39.7 million in 2023, reflecting a gain of $44.0 million resulting from the remeasurement of the Company’s previously held equity interest in RTS Packaging to fair value, partially offset by a loss of $4.3 million from the settlement of a contract associated with the acquisition of the Chattanooga Mill that was determined to have unfavorable terms given market conditions at the time of the acquisition.

See Note 3 to the Consolidated Financial Statements for further information.

Non-operating pension costs were $14.3 million in 2023, compared with $7.1 million in 2022.

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.

The year-over-year increase of $7.2 million was primarily due to higher interest costs on the Company’s defined benefit pension liabilities, resulting from higher year-over-year discount rates.

See Note 14 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 $126.3 million for the year ended December 31, 2023, compared with $97.0 million in 2022.

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.

The increase was primarily due to higher year-over-year average debt balances resulting from the term loans executed in December 2022 and August 2023 and the impact of higher interest rates on the Company’s variable debt.

Additional information regarding the Company’s indebtedness is provided in Note 10 to the Company’s Consolidated Financial Statements.

The effective tax rates on GAAP and Adjusted Earnings for the full year 2023 were 24.3% and 24.6%, respectively, compared with 20.7% and 23.9%, respectively in 2022.

The increase in the GAAP effective tax rate for 2023 was due primarily to the absence in 2023 of a release of a valuation allowance on foreign tax credits.

The increase in the effective tax rate on Adjusted Earnings was primarily due to a variance in tax rates between jurisdictions in which the respective income and charges were taxed.

Reportable Segments

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:

Effective January 1, 2024, the Company will integrate its flexible packaging and thermoforming packaging businesses within the Consumer Packaging segment in order to streamline operations, enhance customer service and better position the business for accelerated growth.

As a result, the Company will change its operating and reporting structure to reflect the way it plans to manage its operations, evaluate performance, and allocate resources going forward.

Therefore, in future reporting periods, the Company’s consumer thermoforming businesses will move from the All Other group of businesses to the Consumer Packaging segment.

The Company’s Industrial Paper Packaging segment will not be affected by these changes.

As of and for the year ended December 31, 2023, there were no changes to the manner in which the Company reviewed financial information at the segment level;

therefore, these changes had no impact on the Company’s reporting structure.

Total operating profit, reported as “Operating Profit” in the Company’s Consolidated Statements of Income, is comprised of the following:

($ in millions) 2023 2022 % Change

6 unchanged sentences

Amortization of acquisition intangibles (87.3) (80.4)

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

Consolidated operating profit* $ 675.5 $ 486.9 38.7 %

Other income/(charges), net 56.3 (107.1)

Total operating profit*

$ 715.8 $ 675.5 6.0 %

*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/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.

Segment results, which are reviewed by Company management to evaluate segment performance, do not include:

restructuring/asset impairment charges:

amortization of acquired intangibles:

acquisition, integration, and divestiture-related charges;

changes in LIFO inventory reserves;

gains/losses from the sale of businesses or other assets;

gains/losses on derivatives;

or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business.

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

1 unchanged sentence

See Note 19 to the Company’s Consolidated Financial Statements for more information on reportable segments.

30 FORM 10-K SONOCO 2023 ANNUAL REPORT

Consumer Packaging

($ in millions) 2023 2022 % Change

Trade sales $ 3,768.0 $ 2,368.3 59.1 %

$ 3,627.0 $ 3,768.0 (3.7) %

Segment operating profits 382.1 526.0 (27.4) %

1 unchanged sentence

Capital spending 186.1 127.5 46.0 %

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 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

Consumer Packaging segment net sales decreased year over year as volumes continued to be impacted by inflationary pricing pressures within retail and volume declines from customer retail destocking throughout the year.

Domestic sales were approximately $2,780 million, down 6.1%, or $180 million, from 2022, while international sales were approximately $847 million, up 4.9%, or $39 million, from 2022.

Segment operating profits decreased by $144.0 million year over year and operating profit margins decreased to 10.5% from 14.0%.

The decreases in operating profit and operating margins were primarily due to unfavorable volume/mix and the unfavorable impact of metal price overlap of approximately $35 million.

These unfavorable impacts were partially offset by improved productivity.

Capital spending in the segment included numerous automation projects in North America and Europe and expansion of manufacturing capabilities in North America, Europe, South America, and Asia.

Industrial Paper Packaging

($ in millions) 2023 2022 % Change

Trade sales $ 2,684.6 $ 2,464.3 8.9 %

$ 2,374.1 $ 2,684.6 (11.6) %

Segment operating profits 317.9 327.9 (3.0) %

1 unchanged sentence

Capital spending 111.6 145.0 (23.0) %

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 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.

Industrial Packaging segment net sales decreased year over year due to unfavorable volume and index-related pricing declines.

Domestic trade sales in the segment decreased $222 million, or 13.8%, to $1,389 million, while international trade sales decreased $89 million, or 8.3%, to $985 million.

Segment operating profit decreased year over year, driven by the unfavorable volume and index-related pricing, partially offset by the full-year impact of strategic pricing initiatives.

Capital spending in the segment included numerous automation projects in North America, productivity projects in North America and Europe, and capacity improvements in North America, Europe, and Asia.

($ in millions) 2023 2022 % Change

Trade sales $ 798.0 $ 757.8 5.3 %

$ 780.2 $ 798.0 (2.2) %

Segment operating profits 103.7 66.0 57.1 %

1 unchanged sentence

Capital spending 24.8 21.2 17.0 %

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.

All Other net sales decreased year over year due to lower volumes, primarily in temperature assured packaging as COVID-related demand declined.

All Other operating profit increased year over year, driven by ongoing structural improvement programs to improve profitability across this diversified collection of businesses, favorable strategic pricing initiatives and strong productivity.

These favorable factors were partially offset by the impact of the lower volumes.

Capital spending in the All Other group of businesses was mostly related to customer development and automation projects in North America.

Financial Position, Liquidity, and Capital Resources

1 unchanged sentence

Cash flows from operations totaled $882.9 million in 2023 compared with $509.0 million in 2022, a year-over-year increase of $373.9 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.

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

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.

GAAP net income increased by $8.9 million year over year, reflecting a non-cash gain in 2023 resulting from the remeasurement of the Company’s previously held equity interest in RTS Packaging to fair value, and gains from the sale of the Company’s timberland properties, and the sales of its S3 and BulkSak businesses.

Net income in the current year also reflected a $32.2 million year-over-year increase in non-cash depreciation, depletion and amortization expense and a $5.0 million increase in net non-cash asset impairment charges.

Cash contributions to the Company’s pension and postretirement plans in 2023 were $14.7 million, compared with $37.4 million in 2022, a year-over-year decrease of $22.7 million.

The prior year contributions included the final Sonoco Retirement Contribution (“SRC”), the non-elective component of the Sonoco Savings Plan.

The SRC was terminated as of December 31, 2021.

Accrued expenses and other assets and liabilities used $46.7 million of cash in 2023 and provided $17.9 million of cash in 2022.

The year-over-year change was largely driven by the higher payout of management incentive compensation in 2023.

Cash paid for taxes increased by $66.9 million year over year.

Tax payments in 2022 benefited from additional accelerated tax depreciation in the United States resulting from the Metal Packaging acquisition, while the 2023 payments did not have this benefit.

Net working capital provided $218.8 million of cash in 2023, while it used $328.7 million of cash in 2022, for a year-over-year increase in operating cash flows of $547.5 million.

The year-over-year improvement was driven largely by inventory reductions in the current year.

Inventory levels at the end of 2022 were higher than usual as the Company sought to mitigate supply chain uncertainty caused by lack of availability and shipment delays.

Inventory levels decreased in 2023, most notably in tinplate steel, as the Company focused on reducing inventory in a lower sales volume environment.

The year-over-year decrease in accounts payable was attributable to the lower spending on inventories and a decline in the cost of inputs (principally steel and old corrugated containers).

Accounts receivable provided $27.4 million more cash in 2023 than in 2022,

31 FORM 10-K SONOCO 2023 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.

reflecting the Company’s active management of collections and compliance with payment terms, along with the impact of lower volumes and lower selling prices.

Investing Activities

Investing activities used $619.3 million of cash in 2023, compared with $1,741.4 million in 2022.

The lower year-over-year use of cash was primarily attributable to lower acquisition spending as the Company invested $372.6 million in acquisitions in 2023 (RTS Packaging, the Chattanooga Mill, and Inapel) compared with $1,427.0 million in 2022 (Metal Packaging, Skjern, and Nordeste).

Capital expenditures in 2023 were $363.1 million, $34.3 million higher than the previous year.

The year-over-year increase was driven by increased investments in various automation projects and strategic growth and productivity projects in both the Consumer Packaging and the Industrial Packaging segments.

Proceeds from the sale of businesses provided $33.2 million of cash in 2023 as the Company received cash from the sale of its S3 and BulkSak businesses.

Proceeds from the sale of assets totaled $80.3 million in 2023, primarily from the sale of the Company’s timberland properties, compared with $9.6 million in the prior year.

In addition, the Company’s year-over-year investments in affiliated companies increased $8.6 million, including a 2.7% equity interest in Northstar valued at $5.0 million which the Company acquired on January 26, 2023, as part of the sale of its S3 business to Northstar.

Other net investing proceeds provided $6.6 million more cash year over year, primarily as a result of higher life insurance proceeds received in the current year.

Financing Activities

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.

Net cash used by financing activities totaled $352.0 million in 2023, compared with a net provision of cash totaling $1,294.2 million in 2022.

Financing activities in 2023 included the net repayment of debt totaling $150.4 million as the Company utilized its strong operating cash flows and proceeds from the sale of assets to repay syndicated term loans ahead of their scheduled maturities.

The Company received net debt proceeds of $1,518.8 million from the issuance of green bonds and a three-year term loan facility in 2022 that were used primarily to fund the January 2022 acquisition of Metal Packaging.

The change in outstanding checks provided cash of $6.4 million in 2023 while using cash of $18.5 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 2023 and 2022 relative to the Company’s December 31 year end.

Cash used to repurchase the Company’s common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $10.6 million in 2023, compared to $4.5 million in 2022.

Also in 2022, the Company used cash of $14.5 million to purchase the remaining 33% ownership interest in Graffo Paranaense de Embalagens S/A from the three noncontrolling partners.

Cash dividends totaled $197.4 million in 2023 compared to $187.1 million in 2022, reflecting the increase in the quarterly dividend payment from $0.49 per share to $0.51 per share approved by the Board in April 2023.

Capital Resources

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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Under this pooling arrangement, the Company and its participating subsidiaries may maintain either a cash deposit or borrowing position through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit.

Because it maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both.

Because it maintains a security interest in the cash deposits and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries with favorable interest terms on both.

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 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.

Beginning in 2020, the Company also began voluntary supply chain financing programs (the “SCF Programs”) to provide certain suppliers with the opportunity to sell receivables due from the Company to the SCF Programs’ 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.

No guarantees are provided by the Company or any of its subsidiaries under the program.

No guarantees are provided by the Company or any of its subsidiaries under the SCF Programs.

Responsibility is limited to making payment on the terms originally negotiated with suppliers, regardless of whether those suppliers sell the receivables to the financial institution.

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

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 $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, 2022, was $3.2 billion, a year-over-year increase of $1.6 billion.

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

All amounts outstanding at December 31, 2023 under the SCF Programs were recorded within trade accounts payable.

The amount owed to the participating financial institution under the SCF Programs and included in accounts payable for continuing operations was $35.8 million at December 31, 2023 and $52.4 million at December 31, 2022.

The Company accounts for all payments made under the SCF Programs 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 SCF Programs and paid by the Company to the participating financial institution was $188 million during 2023 and $270 million during 2022.

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 SCF Programs.

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

The Company’s total debt at December 31, 2023, was $3.1 billion, a year-over-year decrease of $0.1 billion.

The year-over-year change reflects the following actions taken during 2023:

• 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.

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 Metal Packaging.

• On August 7, 2023, the Company entered into a $900 million term loan facility, maturing on August 7, 2028, with a consortium of Farm Credit System institutions (see Note 10 for more information).

A total of $600 million was drawn on August 7, 2023 and used to repay the syndicated term loans that were due in December 2023 and January 2025 and to make certain capital expenditures and to reimburse the Company for certain capital expenditures it had made in its operation of waste disposal facilities in rural areas.

An additional $270 million was drawn on September 8, 2023 and used to partially fund the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill (see Note 3 for more information).

As of December 31, 2023, the Company had repaid a total of $295 million of the amounts drawn and had outstanding borrowings of $575 million under the term loan facility.

32 FORM 10-K SONOCO 2023 ANNUAL REPORT

• 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.

• The Company utilized its strong operating cash flows and proceeds from the sale of assets to repay syndicated term loans of $700 million in July and August 2023, ahead of their scheduled maturities.

On August 7, 2023, the Company increased the commitments under its unsecured revolving credit facility by $150 million to an aggregate amount of $900 million.

The Company entered into this five-year facility, which supports its $500 million commercial paper program, on June 30, 2021.

At December 31, 2023, the Company had approximately $152 million in cash and cash equivalents on hand and $900 million in committed availability under its revolving credit facility, all of which was available for drawdown.

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See Note 10 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.

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 $78.9 million in 2024, $72.4 million in 2025, $71.2 million in 2026, $64.5 million in 2027, and $63.9 million in 2028.

Capital spending is expected to total approximately $350 million in 2024, in line with 2023 (when excluding the impact of proceeds from asset sales).

The Company expects increasing levels of investment for profit generating projects in the Rigid Paper, Flexibles, and Metal Packaging businesses centered around footprint optimization, automation, and sales growth support.

These increases are expected to be offset by moderating year-over-year levels of maintenance capital.

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 2024 and beyond.

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The net underfunded position of the Company’s various U.S and international defined benefit pension and postretirement plans was $127 million at the end of 2023, compared with $98 million at the end of 2022.

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

The increase in the unfunded position reflects an additional unfunded liability of approximately $12 million associated with the acquisition of the remaining interest in RTS Packaging and the related assumption of the RTS Packaging Pension Plan (“RTS Plan”).

The Company contributed approximately $14.7 million to its benefit plans in 2023.

Benefit plan contributions in 2024 are expected to total approximately $19 million.

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

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.

Current assets decreased year over year by $311 million to $2,050 million at December 31, 2023, and current liabilities decreased by $579 million to $1,165 million, resulting in an increase in the Company’s ratio of current assets to current liabilities to 1.8 at December 31, 2023 from 1.4 at December 31, 2022.

Current assets were lower principally due to year-over-year reductions in inventory while current liabilities decreased primarily due to the repayment of the syndicated term loan that was due in December 2023.

Total equity increased $359 million during 2023 as net income of $476 million, other comprehensive income of $63 million and stock-based compensation of $28 million were partially offset by dividends of $199 million and share repurchases of $11 million for tax share withholding on vested stock compensation granted to employees.

The primary driver of other comprehensive income was a $70 million translation gain from the impact of a weaker 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.

On April 20, 2021, the Board 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.

No shares were repurchased under this authorization during 2022;

No shares were repurchased under this authorization during 2022 or 2023;

accordingly, a total of $138 million remains available for share repurchases at December 31, 2023.

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.

Although the ultimate determination of whether to pay dividends is within the sole discretion of the Board 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 share were $2.02 in 2023 , $1.92 in 2022 and $1.80 in 2021.

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33 FORM 10-K SONOCO 2023 ANNUAL REPORT

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

Because the economy in Venezuela is considered highly inflationary under U.S.

GAAP, the Company considers the U.S.

dollar to be the functional currency of its Venezuelan operations and uses the official exchange rate when remeasuring the financial results of those operations.

Economic conditions in Venezuela have worsened considerably over the past several years and there is no indication that conditions are due to improve in the foreseeable future.

Further deterioration could result in the recognition of an impairment charge or a deconsolidation of the subsidiary.

Further deterioration could result in the recognition of an impairment charge or a deconsolidatio n of the subsidiary.

At December 31, 2023, the carrying value of the Company’s net investment in its Venezuelan operations was approximately $2.1 million.

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.

In addition, accumulated other comprehensive loss at December 31, 2023 included a cumulative translation loss of approximately $3.8 million related to the Company’s Venezuela operations.

These translation losses would be reclassified to net income in the event of a complete exit of the business or deconsolidation of these operations.

Turkey has been deemed to be a highly inflationary economy under U.S.

GAAP since the first quarter of 2022.

Accordingly, 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 cumulative impact of applying highly inflationary accounting to Turkey has been a pretax charge to earnings of $6.5 million ($5.0 million after tax), including $3.8 million ($2.9 million after tax) during 2023.

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.

H owever, the Company believes its exposure is limited to its net investment in Turkey which, as of December 31, 2023, was approximately $17.8 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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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.

For such contracts that are designated and qualify as a cash flow hedge under 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, 2023, 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.

dollar terms, was $125 million, of which $34 million related to the Mexican peso, $33 million to the Polish zloty, $26 million to the Canadian dollar, $11 million to the Brazilian real, $7 million to the Danish krone, $6 million to the Colombian peso, $5 million to the Czech koruna and $3 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.

1 unchanged sentence

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

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 .

During 2023, the Company became party to cross-currency swap agreements with a total notional amount of $500 million to effectively convert a portion of the Company’s fixed-rate U.S.

dollar denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt.

The swap agreement provides for the Company to receive semi-annual interest payments in U.S.

dollars at a fixed rate and to make semi-annual interest payments in euros at a fixed rate.

The risk management objective of entering into such agreements is to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros.

The agreements are designated as net investment hedges for accounting purposes.

The gain or loss on the net investment hedge derivative instrument is included in the foreign currency translation component of accumulated other comprehensive loss until the net investment is sold, diluted, or liquidated.

Interest payments received for the cross-currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense.

For the year ended December 31, 2023, the fair value of the Company’s net investment hedges was a loss position of $5.1 million , and a loss of $3.8 million (net of income taxes of $1.3 million ) was reported as a component of accumulated other comprehensive loss within foreign currency items.

The total fair market value of the Company’s derivatives was a net unfavorable position of $10.4 million and $9.7 million at December 31, 2023 and December 31, 2022, respectively.

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.

2 unchanged sentences

Although the costs of compliance have not been significant due to the nature of the materials and processes used in manufacturing operations, such laws also make generators of hazardous wastes and their legal successors financially responsible for the cleanup of sites contaminated by those wastes.

The Company has been named a potentially responsible party at several environmentally contaminated sites.

The Company has been named a PRP at several en vironmentally contaminated sites.

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 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

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (U.S.

The Company had accrued $7.3 million at December 31, 2023 with respect to these sites.

See “Environmen tal Charges” in Item 3 – Legal Proceedings and Note 17 to the Consolidated Financial Statements for more information on environmental matters.

34 FORM 10-K SONOCO 2023 ANNUAL REPORT

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S.

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The following discussion represents those policies that involve the more significant judgments and estimates used in the preparation of the Company’s Consolidated Financial Statements.

31 FORM 10-K SONOCO 2022 ANNUAL REPORT

Business Combinations

1 unchanged sentence

Goodwill is measured as the excess of the consideration transferred, also measured at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed.

The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities including those related to debt, pensions and other postretirement plans, uncertain tax positions, contingent consideration and contingencies.

The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, property, plant, and equipment, deferred tax asset valuation allowances, liabilities including those related to debt, pensions and other postretirement plans, uncertain tax positions, contingent consideration, and contingencies.

This method also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

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 the Company expects to generate from the acquired assets, discount rate, customer attrition rate, and long-term revenue growth projections.

Significant estimates and assumptions in estimating the fair value of acquired patents, customer relationships, trade names, proprietary technology, and other identifiable intangible assets include future cash flows that the Company expects to generate from the acquired assets, discount rate, customer attrition rate, and long-term revenue growth projections.

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.

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, the Company could record impairment charges.

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.

In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation on property, plant, and equipment 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.

For leases acquired in a business combination, 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.

When the implicit rate in the acquired lease is not readily determinable, the Company calculates the lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate for the region in which the acquisition was completed.

An assessment of the certainty associated with the exercise of any lease renewal, termination, and purchase options included in the acquired lease contracts is also performed.

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.

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Assumptions and estimates used in the evaluation of potential impairment can result in adjustments affecting the carrying values of long-lived, intangible and other assets and the recognition of impairment expense in the Company’s Consolidated Financial Statements.

The Company evaluates its long-lived assets (property, plant and equipment), definite-lived intangible assets and other assets (including right of use lease assets, notes receivable and equity investments) for impairment whenever indicators of impairment exist, or when it commits to sell the asset.

The Company evaluates its long-lived assets (property, plant and equipment), definite-lived intangible assets and other assets (including right of use lease assets, notes receivable and equity and other investments) for impairment whenever indicators of impairment exist, or when it commits to sell the asset.

If the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible asset group is less than the carrying value of that asset group, an asset impairment charge is recognized.

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The Company assesses its goodwill for impairment annually and from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole.

If the fair value of a reporting unit exceeds the carrying value of the reporting unit's assets, including goodwill, there is no impairment.

If the fair value of a reporting unit exceeds the carrying value of that reporting unit, there is no impairment.

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 Accounting Standards Codification 350 - "Intangibles-Goodwill and Other."

The Company’s reporting units, as determined in accordance with ASC 350, “Intangibles-Goodwill and Other,” are the same as, or one level below, its operating segments, as determined in accordance with ASC 280, “Segment Reporting.”

The Company completed its most recent annual goodwill impairment testing during the third quarter of 2023.

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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 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.

The quantitative tests, described further below, relied

35 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 weighted average of the income and market approaches.

Under the income approach, the Company uses a discounted cash flow model based on projections of future years’ operating results and associated cash flows.

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 under the market approach.

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

The Company’s projections incorporate management’s estimates of the most-likely expected future results.

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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 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.

Other than in the Plastics-Medical reporting unit, previously known as 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 the 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.

32 FORM 10-K SONOCO 2022 ANNUAL REPORT

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.

Although no reporting units failed the annual impairment test, in management’s opinion, the goodwill of the Plastics-Medical reporting unit is at risk of impairment in the near term if its 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 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.

In the 2023 annual goodwill impairment analysis, projected future cash flows fo r the Plastics-Medical reporting unit were di scounted at 12.0%, and its estimated fair value was determined to exceed its carrying value by approximately 29.9%.

Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate for this unit would have to be increased to 14.5% in order for the estimated fair value of the reporting unit to fall below its carrying value.

Total goodwill associated with the Plastics-Medical reporting unit was $64.2 million at December 31, 2023.

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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As a result, the eventual resolution of these matters could have a different impact on the effective rate than currently reflected or expected.

Stock-Based Compensation Plans

The Company utilizes share-based compensation in the form of restricted stock units, performance contingent restricted stock units, and other share-based awards.

The amount of share-based compensation expense associated with performance contingent restricted stock units is based on estimates of future performance using measures defined in the stock plan descriptions for each award granted.

Share-Based Compensation Plans

The Company utilizes share-based compensation in the form of restricted stock units, performance contingent restricted stock units (“PCSUs”), and other share-based awards.

The fair value of the Company’s restricted stock units is equal to the closing price of the Company’s stock on the date of grant discounted for any projected dividends that are not eligible to be received during the vesting period.

The amount of share-based compensation expense associated with PCSUs is based on estimates of future performance using measures defined in the stock plan descriptions for each award granted.

As of December 31, 2023, these performance measures include the following:

• Base earnings per share — three-year sum of forecasted future and historical annual base earnings per share for the three-year measurement period associated with each award;

• 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.

• Adjusted earnings per share — three-year sum of forecasted future and historical annual adjusted earnings per share for the three-year measurement period associated with each award;

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

For the most recent award grant in 2023, the performance payout will be subject to adjustment by a total stock return modifier as determined by the Company’s relative performance within its targeted peer group.

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.

See Note 13 to the Consolidated Financial Statements for additional information on the Company’s share-based compensation plans.

36 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 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 largest of the Company’s pension and postretirement plans include the U.S.-based Sonoco Pension Plan, the U.S.

nonqualified retirement plans, the U.S.

Retirement and Retiree Health and Life Insurance Plan, and the Sonoco U.K.

Retirement Benefits Plan.

On September 8, 2023, the Company completed the acquisition of the remaining 65% ownership interest of the RTS Packaging joint venture, which included the assumption of the RTS Plan.

At the time of the acquisition, the RTS Plan had a projected benefit obligation (“PBO”) of $43.9 million and plan assets of $32.3 million resulting in an unfunded pension obligation of $11.6 million.

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

The key assumptions used at December 31, 2022 in determining the projected benefit obligation and the accumulated benefit obligation for U.S.

retirement and retiree health and life insurance plans include:

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 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 key assumptions used at December 31, 2023 in determining the PBO and the accumulated benefit obligation for retirement and retiree health and life insurance plans include discount rates and rates of compensation increase.

The key assumptions used to determine the 2023 net periodic benefit cost for retirement and retiree health and life insurance plans include discount rates, expected long-term rate of return on plan assets, and rates of compensation increase.

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.

The expected rate of return assumption is derived by taking into consideration the targeted plan asset allocation, projected future returns by asset class and active investment management.

A third-party asset return model was used to develop an expected range of returns on plan investments over a 12- to 15-year period, with the expected rate of return selected from a best estimate range within the total range of projected results.

A third-party asset return model is used to develop an expected range of returns on plan investments over a 12- to 15-year period, with the expected rate of return selected from a best estimate range within the total range of projected results.

The Company periodically re-balances its plan asset portfolio in order to maintain the targeted allocation levels.

The rate of compensation increase assumption is generally based on salary and incentive compensation increases.

A key assumption for the U.S.

retiree health and life insurance plan is a medical cost trend rate beginning at 6.50% for post-age 65 participants and trending down to an ultimate rate of 4.5% in 2030.

The ultimate trend rate of 4.5% represents the Company’s best estimate of the long-term average annual medical cost increase over the duration of the plan’s liabilities.

It provides for real growth in medical costs in excess of the overall inflation level.

The sensitivity to changes in the critical assumptions for the Company’s U.S.

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Expected return on assets 0.25% decrease N/A $0.6

Another key assumption for the U.S.

retiree health and life insurance plan is a medical cost trend rate beginning at 7.25% for post-age 65 participants and trending down to an ultimate rate of 4.5% in 2033.

The ultimate trend rate of 4.5% represents the Company’s best estimate of the long-term average annual medical cost increase over the duration of the plan’s liabilities.

It provides for real growth in medical costs in excess of the overall inflation level.

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

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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