SONOCO PRODUCTS CO 10-Q

Item 1. Financial Statements. SONOCO PRODUCTS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Dollars and shares in thousands) March 30, 2025 December 31, 2024* Assets Current Assets Cash and cash equivalents $ 181,829 $ 431,010 Trade accounts receivable, net of allowances 994,293 907,526 Other receivables 191,513 175,877 Inventories, net: Finished and in process 583,190 494,090 Materials and supplies 558,667 522,049 Prepaid expenses 200,874 197,134 Current assets of discontinued operations 463,908 450,874 Total Current Assets 3,174,274 3,178,560 Property, Plant and Equipment, Net 2,775,734 2,718,747 Goodwill 2,589,203 2,525,657 Other Intangible Assets, Net 2,623,961 2,586,698 Deferred Income Taxes 14,875 17,371 Right of Use Asset-Operating Leases 329,601 307,688 Other Assets 196,999 208,759 Non-current assets of discontinued operations 975,946 964,310 Total Assets $ 12,680,593 $ 12,507,790 Liabilities and Equity Current Liabilities Payable to suppliers $ 1,023,006 $ 1,130,500 Accrued expenses and other 551,451 604,455 Notes payable and current portion of long-term debt 2,147,787 2,054,525 Accrued taxes 22,516 6,755 Current liabilities of discontinued operations 240,387 242,056 Total Current Liabilities 3,985,147 4,038,291 Long-term Debt, Net of Current Portion 4,978,337 4,985,496 Noncurrent Operating Lease Liabilities 277,932 258,735 Pension and Other Postretirement Benefits 183,280 180,827 Deferred Income Taxes 578,679 583,470 Other Liabilities 118,125 60,847 Non-current liabilities of discontinued operations 97,161 113,911 Total Liabilities 10,218,661 10,221,577 Commitments and Contingencies (See Note 18) Sonoco Shareholders’ Equity Common stock, no par value Authorized 300,000 shares; 98,628 and 98,260 shares issued and outstanding at March 30, 2025 and December 31, 2024, respectively 7,175 7,175 Capital in excess of stated value 178,778 183,250 Accumulated other comprehensive loss ( 324,569 ) ( 502,734 ) Retained earnings 2,586,794 2,583,923 Total Sonoco Shareholders’ Equity 2,448,178 2,271,614 Noncontrolling Interests 13,754 14,599 Total Equity 2,461,932 2,286,213 Total Liabilities and Equity $ 12,680,593 $ 12,507,790 * The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (the “United States” or “U.S.”). See accompanying Notes to Condensed Consolidated Financial Statements (unaudited) 3 SONOCO PRODUCTS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (Dollars and shares in thousands except per share data) Three Months Ended March 30, 2025 March 31, 2024 Net sales $ 1,709,228 $ 1,308,636 Cost of sales 1,355,541 1,037,471 Gross profit 353,687 271,165 Selling, general and administrative expenses 209,063 167,583 Restructuring/Asset impairment charges 13,581 31,010 Loss on divestiture of business and other assets ( 4,183 ) — Operating profit 126,860 72,572 Other expense, net ( 6,517 ) — Non-operating pension costs 3,121 3,295 Interest expense 56,027 30,164 Interest income 7,348 3,133 Income from continuing operations before income taxes 68,543 42,246 Provision for income taxes 21,147 7,871 Income before equity in earnings of affiliates 47,396 34,375 Equity in earnings of affiliates, net of tax 1,921 1,137 Net income from continuing operations 49,317 35,512 Net income from discontinued operations 5,172 29,761 Net income 54,489 65,273 Net income from continuing operations attributable to noncontrolling interests ( 60 ) ( 48 ) Net income from discontinued operations attributable to noncontrolling interests — ( 48 ) Net income attributable to Sonoco $ 54,429 $ 65,177 Weighted average common shares outstanding: Basic 98,913 98,498 Diluted 99,342 99,159 Per common share: Basic earnings per common share: Continuing operations $ 0.50 $ 0.36 Discontinued operations 0.05 0.30 Basic earnings per share attributable to Sonoco $ 0.55 $ 0.66 Diluted earnings per common share: Continuing operations $ 0.50 $ 0.36 Discontinued operations 0.05 0.30 Diluted earnings per share attributable to Sonoco $ 0.55 $ 0.66 See accompanying Notes to Condensed Consolidated Financial Statements (unaudited) 4 SONOCO PRODUCTS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (Dollars in thousands) Three Months Ended March 30, 2025 March 31, 2024 Net income $ 54,489 $ 65,273 Other comprehensive income/(loss): Foreign currency translation adjustments 175,839 ( 19,786 ) Changes in defined benefit plans, net of tax 544 43 Changes in derivative financial instruments, net of tax 1,757 169 Other comprehensive income/(loss) 178,140 ( 19,574 ) Comprehensive income: 232,629 45,699 Net income attributable to noncontrolling interests-continuing operations ( 60 ) ( 48 ) Net income attributable to noncontrolling interests-discontinued operations — ( 48 ) Other comprehensive loss attributable to noncontrolling interests 25 467 Comprehensive income attributable to Sonoco $ 232,594 $ 46,070 See accompanying Notes to Condensed Consolidated Financial Statements (unaudited) 5 SONOCO PRODUCTS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY (unaudited) (Dollars and shares in thousands) Total Equity Common Shares Capital in Excess of Stated Value Accumulated Other Comprehensive Loss Retained Earnings Noncontrolling Interests Outstanding Amount December 31, 2024 $ 2,286,213 98,260 $ 7,175 $ 183,250 $ ( 502,734 ) $ 2,583,923 $ 14,599 Net income 54,489 54,429 60 Other comprehensive income/(loss): Translation gain/(loss) 175,839 175,864 ( 25 ) Defined benefit plan adjustment, net of tax 544 544 Derivative financial instruments, net of tax 1,757 1,757 Other comprehensive income/(loss) 178,140 178,165 ( 25 ) Divestiture of noncontrolling interests ( 637 ) ( 637 ) Dividends ( 51,558 ) ( 51,558 ) Dividends paid to noncontrolling interests ( 243 ) ( 243 ) Issuance of stock awards 273 588 273 Shares repurchased ( 10,573 ) ( 220 ) ( 10,573 ) Share-based compensation 5,828 5,828 March 30, 2025 $ 2,461,932 98,628 $ 7,175 $ 178,778 $ ( 324,569 ) $ 2,586,794 $ 13,754 Total Equity Common Shares Capital in Excess of Stated Value Accumulated Other Comprehensive Loss Retained Earnings Noncontrolling Interests Outstanding Amount December 31, 2023 $ 2,431,835 97,957 $ 7,175 $ 159,047 $ ( 366,262 ) $ 2,624,380 $ 7,495 Net income 65,273 65,177 96 Other comprehensive (loss)/income: Translation loss ( 19,786 ) ( 19,319 ) ( 467 ) Defined benefit plan adjustment, net of tax 43 43 Derivative financial instruments, net of tax 169 169 Other comprehensive loss ( 19,574 ) ( 19,107 ) ( 467 ) Dividends ( 50,348 ) ( 50,348 ) Issuance of stock awards 204 460 204 Shares repurchased ( 9,139 ) ( 162 ) ( 9,139 ) Share-based compensation 8,325 8,325 Other 906 906 March 31, 2024 $ 2,427,482 98,255 $ 7,175 $ 159,343 $ ( 385,369 ) $ 2,639,209 $ 7,124 See accompanying Notes to Condensed Consolidated Financial Statements (unaudited) 6 SONOCO PRODUCTS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Dollars in thousands) Three Months Ended March 30, 2025 March 31, 2024 Cash Flows from Operating Activities: Net income $ 54,489 $ 65,273 Adjustments to reconcile net income to net cash (used)/provided by operating activities: Asset impairments 4,949 8,346 Depreciation, depletion and amortization 121,492 90,559 Share-based compensation expense 5,829 8,325 Equity in earnings of affiliated companies, net ( 1,921 ) ( 1,137 ) Cash dividends from affiliated companies — 41 Net loss on disposition of assets 277 18 Net loss on divestiture of business and other assets 4,183 — Pension and postretirement plan expense 4,357 4,104 Pension and postretirement plan contributions ( 4,223 ) ( 3,989 ) Net decrease in deferred tax liabilities ( 3,720 ) ( 4,869 ) Change in assets and liabilities, net of effects from acquisitions, divestitures and foreign currency adjustments: Trade accounts receivable ( 64,292 ) ( 43,334 ) Inventories ( 110,177 ) 18,407 Payable to suppliers ( 134,906 ) 25,697 Prepaid expenses ( 901 ) ( 3,572 ) Income taxes payable and other income tax items 16,703 9,436 Accrued expenses and other assets and liabilities ( 100,233 ) ( 7,070 ) Net cash (used)/provided by operating activities ( 208,094 ) 166,235 Cash Flows from Investing Activities: Purchases of property, plant and equipment ( 92,657 ) ( 86,458 ) Cost of acquisitions, net of cash acquired — ( 452 ) Proceeds from the sale of business, net 3,513 — Proceeds from the sale of assets, net 474 101 Other net investing activities 88 5,077 Net cash used by investing activities ( 88,582 ) ( 81,732 ) Cash Flows from Financing Activities: Proceeds from issuance of debt 24,535 19,674 Principal repayment of debt ( 473,293 ) ( 21,448 ) Net change in commercial paper 528,000 — Net increase/(decrease) in book cash overdrafts 12,448 ( 1,614 ) Dividends paid to noncontrolling interests ( 243 ) — Cash dividends ( 51,285 ) ( 50,144 ) Payments for share repurchases ( 10,573 ) ( 9,139 ) Net cash provided/(used) by financing activities 29,589 ( 62,671 ) Effects of Exchange Rate Changes on Cash 15,742 ( 1,556 ) Net (Decrease)/Increase in Cash and Cash Equivalents ( 251,345 ) 20,276 Cash and cash equivalents at beginning of period 443,060 151,937 Cash and cash equivalents at end of period $ 191,715 $ 172,213 See accompanying Notes to Condensed Consolidated Financial Statements (unaudited) 7 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 1: Basis of Interim Presentation On April 1, 2025, subsequent to the three-month period ended March 30, 2025, Sonoco Products Company (the “Company” or “Sonoco”) completed the previously announced sale of its Thermoformed and Flexibles Packaging business and its global Trident business (collectively, “TFP”) to TOPPAN Holdings Inc. (“Toppan”) for approximately $ 1,800,000 on a cash-free and debt-free basis and subject to customary adjustments. In accordance with applicable accounting guidance, the results of TFP, previously part of the Company’s Consumer Packaging segment, are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for all periods presented in this Quarterly Report on Form 10-Q. Further, the Company reclassified the assets and liabilities of TFP as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets as of March 30, 2025 and December 31, 2024. The Condensed Consolidated Statements of Comprehensive Income, Changes in Total Equity, and Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. All amounts, percentages and disclosures for all periods presented in this Quarterly Report on Form 10-Q reflect only the continuing operations of Sonoco unless otherwise noted. See Note 2 for additional information. In the opinion of the management of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, unless otherwise stated) necessary to state fairly the consolidated financial position, results of operations and cash flows for the interim periods reported herein. Operating results for the three-month period ended March 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Note 2: Discontinued Operations As disclosed in Note 1 , the Company completed the previously announced sale of TFP o n April 1, 2025 . The following table presents the assets and liabilities that are classified as discontinued operations in the Condensed Consolidated Balance Sheets as of March 30, 2025 and December 31, 2024: 8 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) March 30, 2025 December 31, 2024 Cash and cash equivalents $ 9,886 $ 12,050 Trade accounts receivable, net of allowances of $ 2,190 at March 30, 2025 and $ 2,582 at December 31, 2024 213,627 209,379 Other receivables 48,273 46,001 Inventories, net: Finished and in process 84,616 80,573 Materials and supplies 99,826 94,083 Prepaid expenses 7,680 8,788 Current assets of discontinued operations $ 463,908 $ 450,874 Property, plant and equipment, net of accumulated depreciation of $ 457,621 at March 30, 2025 and $ 465,923 at December 31, 2024 271,237 262,662 Goodwill 505,009 502,621 Other intangible assets, net of accumulated amortization of $ 206,601 at March 30, 2025 and $ 206,437 and December 31, 2024 104,428 103,593 Long-term deferred income taxes 288 262 Right of use asset-operating leases 74,140 75,855 Other assets 20,844 19,317 Non-current assets of discontinued operations $ 975,946 $ 964,310 Payable to suppliers 170,770 172,720 Accrued expenses and other 48,026 62,562 Notes payable and current portion of long-term debt 21,591 6,774 Current liabilities of discontinued operations $ 240,387 $ 242,056 Long-term debt 16,028 29,850 Noncurrent operating lease liabilities 64,458 67,789 Deferred income taxes 16,363 15,928 Other liabilities 312 344 Non-current liabilities of discontinued operations $ 97,161 $ 113,911 9 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table presents key components of “Net income from discontinued operations” for the three months ended March 30, 2025 and March 31, 2024: Three Months Ended March 30, 2025 March 31, 2024 Net sales $ 320,678 $ 328,907 Cost of sales 250,854 262,519 Gross profit 69,824 66,388 Selling, general and administrative expenses 31,607 25,899 Restructuring/Asset impairment charges 426 608 Operating profit 37,791 39,881 Other income, net 182 — Interest expense 24,911 1,056 Interest income 281 425 Income from discontinued operations before income taxes 12,979 39,250 Provision for income taxes 7,807 9,489 Net income from discontinued operations 5,172 29,761 Net income from discontinued operations attributable to noncontrolling interests — ( 48 ) Net income attributable to discontinued operations $ 5,172 $ 29,713 Weighted average common shares outstanding: Basic 98,913 98,498 Diluted 99,342 99,159 Per common share: Net income attributable to discontinued operations: Basic $ 0.05 $ 0.30 Diluted $ 0.05 $ 0.30 The following table presents significant cash flow items from discontinued operations for the three months ended March 30, 2025 and March 31, 2024: Three Months Ended March 30, 2025 March 31, 2024 Depreciation, depletion and amortization (a) $ ( 311 ) $ 15,613 Capital expenditures $ ( 5,572 ) $ ( 12,569 ) (a) Subsequent to entering the agreement on December 8, 2024 to sell TFP, depreciation was not recognized on TFP’s property, plant and equipment, and amortization was not recognized on TFP’s other intangible assets or right of use assets-operating leases, in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment.” 10 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 3: New Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires companies to disclose disaggregated amounts relating to (a) inventory purchases; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization. Further, this guidance will require companies to include certain amounts that are already required to be disclosed under current U.S. generally accepted accounting principles (“GAAP”) in the same disclosure as the other disaggregation requirements, disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The standard is intended to benefit investors by providing more detailed expense disclosures that would be useful in making capital allocation decisions. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 but early adoption is permitted. ASU 2024-03 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which modifies the rules on income tax disclosures to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures. During the three-month period ended March 30, 2025, there were no other newly issued or newly applicable accounting pronouncements that had, or are expected to have, a material impact on the Company’s condensed consolidated financial statements. Further, at March 30, 2025, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s condensed consolidated financial statements. 11 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 4: Acquisitions and Divestitures Eviosys Acquisition On December 4, 2024, the Company completed the acquisition of all issued and outstanding equity interests in Titan Holdings I B.V. (“Eviosys”) from an affiliate of KPS Capital Partners, LP for net cash consideration of $ 3,789,826 . Eviosys is a global supplier of metal packaging that produces food cans and ends, aerosol cans, metal closures and promotional packaging with a large metal food can manufacturing footprint in the Europe, Middle East, and Africa region. The Company funded the Eviosys acquisition, including related fees and expenses, with the net proceeds from the registered public offering of senior unsecured notes, borrowings from two term loan facilities, and cash on hand. See Note 11 to the Company’s Consolidated Financial Statements included in Part IV, Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information. The financial results of Eviosys are included in the Company’s Consumer Packaging segment. The Company’s preliminary fair values of the assets acquired and liabilities assumed in the acquisition of Eviosys, are as follows: Initial Allocation Measurement Period Adjustments Preliminary Allocation Trade accounts receivable $ 300,385 — $ 300,385 Other receivables 114,634 — 114,634 Inventories 445,945 1,630 447,575 Prepaid expenses 47,509 1,448 48,957 Property, plant and equipment 1,057,779 ( 6,573 ) 1,051,206 Right of use asset - operating leases 43,566 — 43,566 Other intangible assets 1,967,678 ( 5,253 ) 1,962,425 Goodwill 1,285,518 595 1,286,113 Long-term deferred income taxes 39,023 ( 388 ) 38,635 Other assets 3,330 19 3,349 Payable to suppliers ( 518,766 ) 132 ( 518,634 ) Accrued expenses and other ( 168,529 ) 325 ( 168,204 ) Accrued wages and other compensation ( 41,749 ) — ( 41,749 ) Notes payable and current portion of long-term debt ( 76,438 ) ( 39 ) ( 76,477 ) Noncurrent operating lease liabilities ( 32,022 ) — ( 32,022 ) Pension and other postretirement benefits ( 51,849 ) — ( 51,849 ) Deferred income taxes ( 599,941 ) 7,716 ( 592,225 ) Other long-term liabilities ( 16,714 ) 388 ( 16,326 ) Noncontrolling interests ( 9,533 ) — ( 9,533 ) Net assets acquired $ 3,789,826 $ — $ 3,789,826 The preliminary allocation of the purchase price of Eviosys to the tangible and intangible assets acquired and liabilities assumed, as reflected in the table above, is based on the Company’s preliminary allocations of their respective fair values, based on information currently available. Management is continuing to finalize its valuation of certain assets and liabilities including, but not limited to: inventory; property, plant and equipment; goodwill; other intangible assets; operating leases; and deferred income taxes, and expects to complete its valuations within one year of the date of acquisition. Factors comprising goodwill for Eviosys, none of which is expected to be deductible for income tax purposes, include increased access to certain markets and the value of the assembled workforce. 12 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table presents the Company’s pro forma consolidated results for the three-month period ended March 31, 2024, assuming the acquisition of Eviosys had occurred on January 1, 2023. This pro forma information is presented for informational purposes only and does not purport to represent the results of operations that would have been achieved if the acquisition had been completed at the beginning of 2023, nor is it necessarily indicative of future consolidated results. Pro Forma Supplemental Information Three Months Ended Consolidated March 31, 2024 Net sales $ 1,839,570 Net income from continuing operations $ 8,146 Net income attributable to Sonoco 1 $ 37,859 1 Includes results of discontinued operations The pro forma information above does not project the Company’s expected results for any future period and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company. Pro forma information for the period ended March 31, 2024 includes adjustments to depreciation, amortization, and income taxes based upon the preliminary fair value allocation of the purchase price to Eviosys’ tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2023. Interest expense on the additional debt issued by the Company to fund the acquisition and retention bonuses incurred related to the acquisition are also included in the pro forma information as if the acquisition had occurred on January 1, 2023. Acquisition-related costs are excluded from 2024 pro forma net income and are instead reflected in 2023 pro forma net income as though the acquisition had occurred on January 1, 2023. Divestiture of Businesses On April 1, 2025, subsequent to the three-month period ended March 30, 2025, the Company completed the previously announced sale of its TFP businesses to Toppan for approximately $ 1,800,000 on a cash-free and debt-free basis and subject to customary adjustments. In accordance with applicable accounting guidance, the results of TFP, previously part of the Company’s Consumer Packaging segment, are presented as discontinued operations in the Condensed Consolidated Statements of Income and, as such, have been excluded from both continuing operations and segment results for all periods presented in this Quarterly Report on Form 10-Q. The Company preliminarily expects to recognize an estimated gain on the divestiture of TFP of at least $ 375,000 , net of tax, in the second quarter of 2025. On March 2, 2025, the Company completed the sale of its tube and core operations in Venezuela, part of the Industrial Paper Packaging segment, in exchange for a receivable in the amount of $ 145 . The sale resulted in a loss of $ 5,390 , including $ 3,792 of cumulative translation losses that were reclassified from accumulated other comprehensive income. This loss is included in “Loss on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income. In February 2025, the remaining $ 2,000 of proceeds from the July 1, 2023 sale of the Company’s U.S. BulkSak business were released to the Company from escrow. On January 17, 2025, the Company completed the sale of a small construction tube operation in France, part of the Industrial Paper Packaging segment, for cash proceeds of $ 1,513 and recognized a gain of $ 1,207 , which is included in “Loss on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income. The sales of the operations in Venezuela and France do not represent a strategic shift for the Company and did not have a major effect on its operations or financial results. Consequently, these sales did not meet the criteria for reporting as discontinued operations. 13 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Acquisition, Integration, and Divestiture-Related Costs Acquisition, integration, and divestiture-related costs from continuing operations totaled $ 27,266 and $ 5,504 during the three-month periods ended March 30, 2025 and March 31, 2024, respectively. These costs included $ 9,317 and $ 5,504 during the three-month periods ended March 30, 2025 and March 31, 2024, respectively, for legal and professional fees, representation and warranty insurance premiums, as well as employee-related costs, and other integration activity costs that are included in “Selling, general and administrative expenses.” In addition, amortization of the fair value step-up of finished goods inventory totaled $ 17,949 during the three-month period ended March 30, 2025 and is included in “Cost of sales” in the Company’s Condensed Consolidated Statements of Income. Note 5: Shareholders’ Equity Earnings per Share The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 30, 2025 March 31, 2024 Numerator: Net income from continuing operations $ 49,317 $ 35,512 Net income from continuing operations attributable to noncontrolling interests ( 60 ) ( 48 ) Net income from continuing operations attributable to Sonoco 49,257 35,464 Net income attributable to Sonoco $ 54,429 $ 65,177 Denominator: Weighted average common shares outstanding 98,913 98,498 Dilutive effect of shared-based compensation 429 661 Diluted outstanding shares 99,342 99,159 Per common share: Basic earnings per common share: Net income from continuing operations $ 0.50 $ 0.36 Net income attributable to Sonoco $ 0.55 $ 0.66 Diluted earnings per common share: Net income from continuing operations $ 0.50 $ 0.36 Net income attributable to Sonoco $ 0.55 $ 0.66 Cash dividends $ 0.52 $ 0.51 No adjustments were made to “Net income attributable to Sonoco” in the computations of net income attributable to Sonoco per common share. Anti-dilutive Securities Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock appreciation rights (“SARs”) are used to repurchase the Company’s common stock. Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were anti-dilutive. These SARs may become dilutive in the future if the market price of the Company’s common stock appreciates. 14 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The average numbers of SARs that were anti-dilutive and, therefore, not included in the computation of diluted earnings per share during the three-month periods ended March 30, 2025 and March 31, 2024 were as follows (in thousands): Three Months Ended March 30, 2025 March 31, 2024 Anti-dilutive stock appreciation rights 548 340 Stock Repurchases On April 20, 2021, the Company’s Board of Directors (the “Board”) authorized the repurchase of the Company’s common stock in an aggregate amount of up to $ 350,000 . Following several repurchase transactions in 2021, a total of $ 137,972 remained available for share repurchases under this authorization as of December 31, 2021. Subsequent to 2021, no additional shares have been repurchased under this authorization. The Company regularly repurchases shares of its common stock to satisfy employee tax withholding obligations in association with certain share-based compensation awards. These repurchases, which are not part of a publicly announced plan or program, totaled 220 shares during the three-month period ended March 30, 2025, at a cost of $ 10,573 , and 162 shares during the three-month period ended March 31, 2024, at a cost of $ 9,139 . Dividend Declarations On February 12, 2025, the Board declared a regular quarterly dividend of $ 0.52 per share. This dividend was paid on March 10, 2025 to all shareholders of record as of February 26, 2025. On April 16, 2025, the Board declared a regular quarterly dividend of $ 0.53 per share. This dividend is payable on June 10, 2025 to all shareholders of record as of May 9, 2025. Note 6: Restructuring and Asset Impairments Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is continually seeking more cost-effective means and structures to serve its customers and to respond to significant changes in its markets. As such, plant closures in connection with footprint rationalization and headcount reductions are an important component of the Company’s cost control initiatives. The amount of these costs can vary significantly from quarter to quarter and from year to year depending upon the scope, nature, and location of the restructuring activities. Following are the total restructuring and asset impairment charges, net of adjustments, recognized during the periods presented: Three Months Ended March 30, 2025 March 31, 2024 Restructuring and restructuring-related asset impairment charges $ 13,581 $ 31,010 Other asset impairments — — Restructuring/Asset impairment charges $ 13,581 $ 31,010 15 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The table below sets forth restructuring and restructuring-related asset impairment charges by type incurred: Three Months Ended March 30, 2025 March 31, 2024 Severance and Termination Benefits $ 6,998 $ 17,791 Asset Impairment/Disposal of Assets 5,101 8,122 Other Costs 1,482 5,097 Total restructuring and restructuring-related asset impairment charges $ 13,581 $ 31,010 The table below sets forth restructuring and restructuring-related asset impairment charges attributable to each reportable segment, the All Other group of businesses, and Corporate-related activity: Three Months Ended March 30, 2025 March 31, 2024 Consumer Packaging $ 1,229 $ 4,317 Industrial Paper Packaging 12,535 22,603 All Other ( 32 ) 1,148 Corporate ( 151 ) 2,942 Total restructuring and restructuring-related asset impairment charges $ 13,581 $ 31,010 Restructuring and restructuring-related asset impairment charges are included in “Restructuring/Asset impairment charges” in the Company’s Condensed Consolidated Statements of Income. The following table sets forth the activity in the restructuring accrual included in “Accrued expenses and other” in the Company’s Condensed Consolidated Balance Sheets: Severance and Termination Benefits Asset Impairments/ Disposal of Assets Other Costs Total Accrual Activity Liability at December 31, 2024 $ 24,034 $ — $ 909 $ 24,943 2025 charges 6,998 5,101 1,482 13,581 Cash (payments)/receipts ( 9,271 ) 10 ( 1,452 ) ( 10,713 ) Asset write downs/disposals — ( 5,111 ) — ( 5,111 ) Foreign currency translation 227 — 274 501 Liability at March 30, 2025 $ 21,988 $ — $ 1,213 $ 23,201 “Severance and Termination Benefits” during the three-month period ended March 30, 2025 includes the cost of severance for approximately 80 employees whose positions were eliminated in conjunction with the Company’s ongoing organizational effectiveness efforts, including severance related to the closures of a cone facility in China, a cone facility in Mexico, and a partitions facility in Scarborough, Maine, all part of the Industrial Paper Packaging segment. “Asset Impairment/Disposal of Assets” during the three-month period ended March 30, 2025 consists primarily of asset write-offs related to the closures of the cone facilities in China and Mexico, and the partitions facility in Scarborough, Maine, all part of the Industrial Paper Packaging segment. 16 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) “Other Costs” during the three-month period ended March 30, 2025 consists primarily of equipment removal, utilities, plant security, property taxes, insurance and environmental remediation costs related to the prior year’s closure of the Company’s paper mill in Sumner, Washington, and ongoing facility carrying costs of previously announced plant closures. The Company expects to pay the majority of the remaining restructuring reserves by the end of 2025 using cash generated from operations. The Company also expects to recognize future additional charges totaling approximately $ 5,700 in connection with previously announced restructuring actions and believes that the majority of these charges will be incurred and paid by the end of 2025. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken. Note 7: Accumulated Other Comprehensive Loss The following table summarizes the components of accumulated other comprehensive loss and the changes in the balances of each component of accumulated other comprehensive loss, net of tax as applicable, for the three-month periods ended March 30, 2025 and March 31, 2024: Foreign Currency Items Defined Benefit Pension Items Gains and Losses on Cash Flow Hedges Accumulated Other Comprehensive Loss Balance at December 31, 2024 $ ( 410,931 ) $ ( 90,613 ) $ ( 1,190 ) $ ( 502,734 ) Other comprehensive income/(loss) before reclassifications 172,072 ( 265 ) 2,024 173,831 Amounts reclassified from accumulated other comprehensive loss to net income 3,792 809 ( 267 ) 4,334 Other comprehensive income 175,864 544 1,757 178,165 Balance at March 30, 2025 $ ( 235,067 ) $ ( 90,069 ) $ 567 $ ( 324,569 ) Balance at December 31, 2023 $ ( 267,578 ) $ ( 99,627 ) $ 943 $ ( 366,262 ) Other comprehensive (loss)/income before reclassifications ( 19,319 ) ( 932 ) 518 ( 19,733 ) Amounts reclassified from accumulated other comprehensive loss to net income — 975 ( 349 ) 626 Other comprehensive (loss)/income ( 19,319 ) 43 169 ( 19,107 ) Balance at March 31, 2024 $ ( 286,897 ) $ ( 99,584 ) $ 1,112 $ ( 385,369 ) 17 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table summarizes the effects on net income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three-month periods ended March 30, 2025 and March 31, 2024: Amount Reclassified from Accumulated Other Comprehensive Loss Three Months Ended Details about Accumulated Other Comprehensive Loss Components March 30, 2025 March 31, 2024 Affected Line Item in the Condensed Consolidated Statements of Income Foreign currency items Currency translation adjustment loss on Venezuela sale (a) $ ( 3,792 ) $ — Loss on divestiture of business and other assets ( 3,792 ) — Net income Gains/(losses) on cash flow hedges Foreign exchange contracts (b) 399 436 Net sales Foreign exchange contracts (b) ( 41 ) ( 75 ) Cost of sales 358 361 Income before income taxes Income tax impact ( 91 ) ( 12 ) Provision for income taxes 267 349 Net income Defined benefit pension items Amortization of defined benefit pension items (c) ( 1,056 ) ( 1,230 ) Non-operating pension costs ( 1,056 ) ( 1,230 ) Income before income taxes Income tax impact 247 255 Provision for income taxes ( 809 ) ( 975 ) Net income Total reclassifications for the period $ ( 4,334 ) $ ( 626 ) Net income (a) See Note 4 for additional details. (b) See Note 11 for additional details. (c) See Note 13 for additional details. 18 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the three-month periods ended March 30, 2025 and March 31, 2024: Three Months Ended March 30, 2025 Three Months Ended March 31, 2024 Before Tax Amount Tax (Expense) Benefit After Tax Amount Before Tax Amount Tax (Expense) Benefit After Tax Amount Foreign currency items: Net other comprehensive income/(loss) from foreign currency items $ 161,828 $ 10,244 $ 172,072 $ ( 16,788 ) $ ( 2,531 ) $ ( 19,319 ) Amounts reclassified from accumulated other comprehensive loss to net income (a) 3,792 — 3,792 — — — Net other comprehensive income/(loss) from foreign currency items 165,620 10,244 175,864 ( 16,788 ) ( 2,531 ) ( 19,319 ) Defined benefit pension items: Other comprehensive income/(loss) before reclassifications ( 346 ) 81 ( 265 ) ( 876 ) ( 56 ) ( 932 ) Amounts reclassified from accumulated other comprehensive loss to net income (b) 1,056 ( 247 ) 809 1,230 ( 255 ) 975 Net other comprehensive (loss)/income from defined benefit pension items 710 ( 166 ) 544 354 ( 311 ) 43 Gains and losses on cash flow hedges: Other comprehensive (loss)/income before reclassifications 2,715 ( 691 ) 2,024 536 ( 18 ) 518 Amounts reclassified from accumulated other comprehensive loss to net income (c) ( 358 ) 91 ( 267 ) ( 361 ) 12 ( 349 ) Net other comprehensive income/(loss) from cash flow hedges 2,357 ( 600 ) 1,757 175 ( 6 ) 169 Other comprehensive income/(loss) $ 168,687 $ 9,478 $ 178,165 $ ( 16,259 ) $ ( 2,848 ) $ ( 19,107 ) (a) See Note 4 for additional details. (b) See Note 13 for additional details. (c) See Note 11 for additional details. 19 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 8: Goodwill and Other Intangible Assets Goodwill A summary of the changes in goodwill for the three-month period ended March 30, 2025 is as follows: Consumer Packaging Industrial Paper Packaging All Other Total Goodwill at December 31, 2024 $ 1,807,971 $ 486,636 $ 231,050 $ 2,525,657 Measurement period adjustments 595 — — 595 Foreign currency translation 58,441 7,543 ( 3,033 ) 62,951 Goodwill at March 30, 2025 $ 1,867,007 $ 494,179 $ 228,017 $ 2,589,203 Goodwill activity reflected under the caption “Measurement period adjustments” relates to the prior year acquisition of Eviosys. See Note 4 for additional information. The Company assesses goodwill for impairment annually during the third quarter, or from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole. The Company completed its most recent annual goodwill impairment testing during the third quarter of 2024 and analyzed certain qualitative and quantitative factors in determining whether a goodwill impairment existed. The Company’s assessments reflected a number of significant management assumptions and estimates including the Company’s forecast of sales growth, gross profit margins, and discount rates. Changes in these assumptions could materially impact the Company’s conclusions. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units. Although no reporting units failed the annual impairment test, in management’s opinion, the goodwill balance of the Metal Packaging - US reporting unit is at risk of impairment in the near term if the reporting unit’s operations do not perform in line with management’s expectations, or if there is a negative change in the long-term financial outlook for the reporting unit or in other factors such as the discount rate. The total goodwill associated with the Metal Packaging - US reporting unit was $ 384,315 at March 30, 2025. During the time subsequent to the annual evaluation, and at March 30, 2025, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired. It is management’s opinion that no such events and/or changes in circumstances have occurred. 20 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Other Intangible Assets A summary of other intangible assets as of March 30, 2025 and December 31, 2024 is as follows: March 30, 2025 December 31, 2024 Other Intangible Assets, gross: Patents $ 29,154 $ 28,941 Customer lists 2,753,526 2,679,372 Trade names 39,253 38,623 Proprietary technology 229,475 226,936 Other 7,790 2,339 Total Other Intangible Assets, gross $ 3,059,198 $ 2,976,211 Accumulated Amortization: Patents $ ( 16,566 ) $ ( 15,955 ) Customer lists ( 370,648 ) ( 332,680 ) Trade names ( 14,236 ) ( 13,239 ) Proprietary technology ( 32,080 ) ( 26,203 ) Other ( 1,707 ) ( 1,436 ) Total Accumulated Amortization ( 435,237 ) ( 389,513 ) Other Intangible Assets, net $ 2,623,961 $ 2,586,698 During the first quarter of 2025, the Company recorded measurement period adjustments related to the December 4, 2024 acquisition of Eviosys that reduced the previously reported fair value of customer lists by $ 5,253 . The effect on amortization expense in the prior period was immaterial. See Note 4 for additional information. Other intangible assets are amortized using the straight-line method over their respective useful lives when management has determined that the straight-line method approximates the pattern of consumption of the respective intangible assets or in relation to the asset’s specific pattern of consumption if management has determined that the straight-line method does not provide a fair approximation of the consumption of benefits. These lives generally range from three to forty years . The Company has no intangible assets with indefinite lives. Aggregate amortization expense was $ 41,961 and $ 17,894 for the three-month periods ended March 30, 2025 and March 31, 2024, respectively. Amortization expense on other intangible assets is expected to total approximately $ 169,900 in 2025, $ 168,300 in 2026, $ 167,600 in 2027, $ 167,400 in 2028 and $ 165,100 in 2029. Note 9: Supply Chain Financing The Company facilitates voluntary supply chain financing programs (the “SCF Programs”) to provide certain of its suppliers with the opportunity to sell receivables due from the Company to the participating financial institutions in the programs. Such sales are conducted at the sole discretion of both the suppliers and the financial institutions on a nonrecourse basis at a rate that leverages the Company’s credit rating and thus might be more beneficial to the supplier. No guarantees are provided by the Company or any of its subsidiaries under the SCF Programs. The Company’s responsibility under the agreements is limited to making payment to the financial institutions for confirmed invoices based on the terms originally negotiated with its suppliers. Both the Company and the financial institutions have the right to terminate the SCF Programs by providing 30 days prior written notice to the other party. The Company does not enter into any agreements with suppliers regarding their participation in the SCF Programs. 21 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table sets forth the balance sheet location and values of the obligations under the Company’s SCF Programs at March 30, 2025 and December 31, 2024: Balance Sheet Line Item March 30, 2025 December 31, 2024 Payable to suppliers (a) $ 25,796 $ 28,496 (a) The payment of these obligations is included in net cash provided by operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. Note 10: Debt Details of the Company’s debt at March 30, 2025 and December 31, 2024 are as follows: March 30, 2025 December 31, 2024 Commercial paper $ 528,000 $ — 364-Day term loan due December 2025 1,495,787 1,493,568 Term loan due December 2026 698,459 698,167 Syndicated term loan due August 2028 497,832 497,674 1.800 % notes due February 2025 — 399,933 4.450 % notes due September 2026 497,327 496,869 2.250 % notes due February 2027 299,056 298,930 4.600 % notes due September 2029 594,806 594,519 3.125 % notes due May 2030 597,097 596,958 2.850 % notes due February 2032 496,429 496,302 5.000 % notes due September 2034 690,059 689,802 5.750 % notes due November 2040 536,290 536,282 Other foreign denominated debt 117,815 155,048 Finance lease obligations 59,875 67,628 Other debt 17,292 18,341 Total debt 7,126,124 7,040,021 Less: Notes payable and current portion of long-term debt ( 2,147,787 ) ( 2,054,525 ) Long-term debt $ 4,978,337 $ 4,985,496 Included in “Other foreign denominated debt” at March 30, 2025 and December 31, 2024 are $ 51,949 and $ 73,487 , respectively, of transfers of certain trade receivables of Eviosys to third-party financial institutions for which the requirements to be accounted for as true sale in accordance with the guidance under ASC 860, “Transfers and Servicing,” were not met. Additions to and settlements of these obligations are reflected as “Proceeds from issuance of debt” and “Principal repayment of debt,” respectively, in “Net cash provided/(used) by financing activities” in the Company’s Condensed Consolidated Statements of Cash Flows. On February 3, 2025, the Company repaid the $ 400,000 aggregate principal amount of its 1.800 % notes due February 2025 upon maturity using proceeds from the issuance of commercial paper. The Company maintains a revolving credit facility with total commitments of $ 1,250,000 and a maturity date of May 3, 2029. The Company’s $ 1,250,000 commercial paper program is supported by the revolving credit facility. At March 30, 2025 , the Company had $ 528,000 in commercial paper balances outstanding; accordingly, the committed capacity available for drawdown under its revolving credit facility at March 30, 2025 was $ 722,000 . On April 1, 2025, subsequent to the end of the three-month period ended March 30, 2025 , the Company completed the sale of TFP. On April 3, 2025, the Company used a portion of the cash proceeds from the sale to repay the outstanding $ 1,500,000 principal amount of borrowings under its 364 -day term loan facility. 22 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Certain of the Company’s debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements. As of March 30, 2025, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants. Note 11: Financial Instruments and Derivatives The following table sets forth the carrying amounts and fair values of the Company’s significant financial instruments for which the carrying amount differs from the fair value. March 30, 2025 December 31, 2024 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, net of current portion $ 4,978,337 $ 4,829,445 $ 4,985,496 $ 4,800,455 The carrying value of cash and cash equivalents and short-term debt approximates fair value. The fair value of long-term debt is determined based on recent trade information in the financial markets of the Company’s public debt or is determined by discounting future cash flows using interest rates available to the Company for issues with similar terms and maturities which is considered a Level 2 fair value measurement. Cash Flow Hedges At March 30, 2025 and December 31, 2024, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. These contracts, w hich have maturities ranging from April 2025 to December 2025, qualify as cash flow hedges under GAAP. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. Cash flows from derivative financial instruments designated as cash flow hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Commodity Cash Flow Hedges Certain derivative contracts entered into to manage the cost of anticipated purchases of natural gas and aluminum have been designated by the Company as cash flow hedges. At March 30, 2025, there were no natural gas swaps covering anticipated natural gas usage in 2025, and aluminum swaps covering 4,179 metric tons of aluminum represented approximately 38.0 % of anticipated aluminum usage for 2025. The fair value of the Company’s commodity cash flow hedges netted to gain positions of $ 116 and $ 652 at March 30, 2025 and December 31, 2024, respectively. The amount of the gain included in accumulated other comprehensive income at March 30, 2025 expected to be reclassified to the income statement during the next twelve months is $ 116 . The Company also has certain natural gas hedges that it does not treat as cash flow hedges. See “Non-Designated Derivatives” below for a discussion of these hedges. 23 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Foreign Currency Cash Flow Hedges The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales and purchases expected to occur in 2025. The net positions of these contracts at March 30, 2025 were as follows (in thousands): Currency Action Quantity USD Contracts Colombian peso purchase 20,102,855 Mexican peso purchase 297,228 Danish krone purchase 120,270 Polish zloty purchase 99,563 Czech koruna purchase 87,666 Turkish lira purchase 86,103 Euro purchase 2,687 Canadian dollar purchase 2,487 Swedish krona sell ( 4,565 ) British pound sell ( 4,428 ) Euro Contracts Euro purchase 29,132 British pound sell ( 5,382 ) USD sell ( 762 ) Hungarian forint sell ( 4,336,028 ) The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 1,120 and a loss position of $( 1,841 ) at March 30, 2025 and December 31, 2024, respectively. Gains of $ 1,120 are expected to be reclassified from accumulated other comprehensive income to the income statement during the next twelve months. 24 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Net Investment Hedge In 2023, the Company became a party to cross-currency swap agreements with a total notional amount of $ 500,000 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 agreements, which had a maturity of December 18, 2026, provided 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 the swap agreements was to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros. The agreements were designated as net investment hedges for accounting purposes. On April 15, 2024, as a result of the strengthening of the U.S. dollar against the euro, as well as a reduction in the differential between U.S. and European interest rates, the Company terminated its swap agreements and received a net cash settlement of $ 9,068 . The foreign currency translation gain of approximately $ 3,143 , net of tax, is included as a component of “Accumulated other comprehensive loss.” Following the unwind of the swaps, the Company entered into new cross-currency swap agreements with a total notional amount of $ 500,000 in April 2024 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 new swap agreements, which have a maturity of May 1, 2027, share the same risk management objective as the terminated cross-currency swap agreements and are also designated as net investment hedges for accounting purposes. In December 2024, the Company entered into additional cross-currency swap agreements with a total notional amount of $ 1,500,000 , including $ 500,000 maturing on September 1, 2026, $ 500,000 maturing on September 1, 2029, and $ 500,000 maturing on May 1, 2030. The swaps 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 at the prevailing market rate at execution. The new swap agreements share the same risk management objective as the Company’s previously existing cross-currency swap agreements and are also designated as net investment hedges for accounting purposes. The gain or loss on the net investment hedge derivative instruments 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 swaps are excluded from the net investment hedge effectiveness assessment and are recorded in “Interest expense” in the Company’s Condensed Consolidated Statements of Income. The assumptions used in measuring fair value of the cross-currency swaps are considered level 2 inputs, which are based upon the Euro-to-U.S. dollar exchange rate market. The fair value of the Company’s net investment hedges was a loss position of $ 49,242 and a gain position of $ 11,919 at March 30, 2025 and December 31, 2024, respectively. A foreign currency translation loss of $ 36,685 (net of income taxes of $ 12,557 ) and a gain of $ 8,880 (net of income taxes of $ 3,039 ) were reported as components of “Accumulated other comprehensive loss” within “Foreign currency items” at March 30, 2025 and December 31, 2024, respectively. Non-Designated Derivatives The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under ASC 815, “Derivatives and Hedging.” As such, changes in fair value of these non-designated derivatives are recorded directly to income and expense in the periods that they occur. Cash flows from derivative financial instruments not designated as hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. 25 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Foreign Currency Hedges The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables. The net currency positions of these non-designated contracts at March 30, 2025, were as follows (in thousands): Currency Action Quantity USD Contracts Colombian peso purchase 62,149,892 Mexican peso purchase 282,395 Indonesian rupiah purchase 14,957,473 Thai baht sell ( 30,514 ) Euro purchase 426 Canadian dollar purchase 3,695 Euro Contracts British pound sell ( 99,984 ) Polish zloty sell ( 51,255 ) Thai baht sell ( 468,966 ) Commodity Hedges The Company has entered into non-designated derivative contracts to manage the cost of a nticipated purchases of natural gas. At March 30, 2025, these contracts consisted of natural gas swaps covering approximately 3.8 million metric million British thermal units (“MMBTUs”) and represented approximately 74.5 % of anticipated usage in North America for the remainder of 2025. The fair value of the Company’s non-designated deriva tives position was a gain of $ 2,955 and a loss of $( 2,694 ) at March 30, 2025 and December 31, 2024, respectively. The following table sets forth the location and fair values of the Company’s derivative instruments at March 30, 2025 and December 31, 2024: Description Balance Sheet Location March 30, 2025 December 31, 2024 Derivatives designated as hedging instruments: Commodity Contracts Prepaid expenses $ 344 $ 671 Commodity Contracts Accrued expenses and other ( 228 ) ( 19 ) Foreign Exchange Contracts Prepaid expenses 3,159 2,068 Foreign Exchange Contracts Accrued expenses and other ( 2,039 ) ( 3,909 ) Net investment hedge Prepaid expenses 25,273 26,833 Net investment hedge Other assets — 1,845 Net investment hedge Other liabilities ( 74,515 ) ( 16,759 ) Derivatives not designated as hedging instruments: Commodity Contracts Prepaid expenses $ 3,476 $ 961 Commodity Contracts Accrued expenses and other ( 18 ) ( 574 ) Foreign Exchange Contracts Prepaid expenses 385 ( 59 ) Foreign Exchange Contracts Accrued expenses and other ( 888 ) ( 3,022 ) While certain of the Company’s derivative contract arrangements with its counterparties provide for the ability to settle contracts on a net basis, the Company reports its derivative positions on a gross basis. There are no collateral arrangements or requirements in these agreements. 26 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three-month periods ended March 30, 2025 and March 31, 2024, excluding the amount of foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures: Description Amount of Gain or (Loss) Recognized in OCI on Derivatives Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income Derivatives in Cash Flow Hedging Relationships: Three-month period ended March 30, 2025 Foreign Exchange Contracts $ 3,251 Net sales $ 399 Cost of sales ( 41 ) Commodity Contracts ( 536 ) Cost of sales — Three-month period ended March 31, 2024 Foreign Exchange Contracts $ 561 Net sales $ 436 Cost of sales ( 75 ) Commodity Contracts ( 25 ) Cost of sales — Description Gain or (Loss) Recognized Location of Gain or (Loss) Recognized in Income Statement Derivatives not Designated as Hedging Instruments: Three-month period ended March 30, 2025 Commodity Contracts $ 3,337 Cost of sales Foreign Exchange Contracts 3,569 Selling, general and administrative Three-month period ended March 31, 2024 Commodity Contracts $ ( 2,558 ) Cost of sales Foreign Exchange Contracts 305 Selling, general and administrative Description Revenue Cost of sales Revenue Cost of sales Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income $ 399 $ ( 41 ) $ 436 $ ( 75 ) Gain or (loss) on cash flow hedging relationships: Foreign exchange contracts: Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income $ 399 $ ( 41 ) $ 436 $ ( 75 ) Commodity contracts: Amount of gain reclassified from accumulated other comprehensive loss into net income $ — $ — $ — $ — 27 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 12: Fair Value Measurements Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Observable inputs such as quoted market prices in active markets; Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3 – Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets that are calculated at Net Asset Value per share (“NAV”) are not required to be categorized within the fair value hierarchy. The following table sets forth information regarding the Company’s financial assets and financial liabilities, excluding retirement and postretirement plan assets, measured at fair value on a recurring basis: Description March 30, 2025 Assets measured at NAV Level 1 Level 2 Level 3 Hedge derivatives, net: Commodity contracts $ 116 $ — $ — $ 116 $ — Foreign exchange contracts 1,120 — — 1,120 — Net investment hedge ( 49,242 ) — — ( 49,242 ) — Non-hedge derivatives, net: Commodity contracts 3,458 — — 3,458 — Foreign exchange contracts ( 503 ) — — ( 503 ) — Description December 31, 2024 Assets measured at NAV Level 1 Level 2 Level 3 Hedge derivatives, net: Commodity contracts $ 652 $ — $ — $ 652 $ — Foreign exchange contracts ( 1,841 ) — — ( 1,841 ) — Net investment hedge 11,919 — — 11,919 — Non-hedge derivatives, net: Commodity contracts 387 — — 387 — Foreign exchange contracts ( 3,081 ) — — ( 3,081 ) — As discussed in Note 11 , the Company uses derivatives to mitigate the effect of commodity fluctuations, foreign currency fluctuations and, from time to time, interest rate movements. Fair value measurements for the Company’s derivatives are classified under Level 2 because such measurements are estimated based on observable inputs such as interest rates, yield curves, spot and future commodity prices and spot and future exchange rates. None of the Company’s financial assets or liabilities are measured at fair value using significant unobservable inputs. There were no transfers in or out of Level 1 or Level 2 fair value measurements during the three-month period ended March 30, 2025. The Company has an investment in the preferred stock of a nonaffiliated private company. This investment is accounted for under the measurement alternative of cost less impairment, adjusted for any qualifying observable price changes on a non-recurring basis. Observable price changes would consist of Lev el 2 inputs based on privately negotiated transactions with the nonaffiliated company. The total investment in p referred stock of $ 21,212 is included in “Other assets” in the Company’s Condensed Consolidated Balance Sheet as of March 30, 2025. 28 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The Company measures certain non-financial assets and non-financial liabilities at fair value on a non-recurring basis. See Note 4 for a discussion of assets acquired and liabilities assumed in acquisitions and sold in dispositions, and Note 6 for a discussion of asset impairments associated with restructuring activities. The fair value of assets determined based on third-party appraisals and classified as Level 3 measurements due to the use of significant unobservable inputs was not material at March 30, 2025 or December 31, 2024. Note 13: Employee Benefit Plans Retirement Plans and Retiree Health and Life Insurance Plans The Company provides non-contributory defined benefit pension plans for certain of its employees in the United States, Mexico, Belgium, Germany, France, and Turkey. Following the acquisition of Eviosys on December 4, 2024, the Company now also provides non-contributory defined benefit pension plans for certain of its employees in Italy, Switzerland, Spain, and Ireland. The Company also sponsors contributory defined benefit pension plans covering certain of its employees in the United Kingdom, Canada and the Netherlands, and provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements. The components of net periodic benefit cost include the following: Three Months Ended March 30, 2025 March 31, 2024 Retirement Plans Service cost $ 1,196 $ 755 Interest cost 5,133 4,709 Expected return on plan assets ( 3,205 ) ( 2,796 ) Amortization of prior service cost 188 205 Amortization of net actuarial loss 988 1,075 Net periodic benefit cost $ 4,300 $ 3,948 Retiree Health and Life Insurance Plans Service cost $ 39 $ 54 Interest cost 237 250 Expected return on plan assets ( 100 ) ( 98 ) Amortization of prior service credit 94 96 Amortization of net actuarial gain ( 214 ) ( 146 ) Net periodic benefit cost $ 56 $ 156 Contributions The Company made aggregate contributions of $ 4,223 and $ 3,989 to its defined benefit retirement and retiree health and life insurance plans during the three-month periods ended March 30, 2025 and March 31, 2024, respectively. The Company expects to make additional aggregate contributions of approximately $ 18,800 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2025. 29 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Note 14: Income Taxes The Company’s effective tax rates for the three-month periods ended March 30, 2025 and March 31, 2024 were 30.9 % and 18.6 %, respectively. The Company’s effective tax rates varied from the U.S. statutory rate due primarily to rate differences between U.S. and non-U.S. jurisdictions and the relative amounts earned in those jurisdictions, state income taxes, and discrete tax adjustments that were not consistent year over year. The Company and/or its subsidiaries file federal, state and local income tax returns in the United States and various foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years prior to 2019. The Company’s reserve for uncertain tax benefits decreased by $ 358 from December 31, 2024 to March 30, 2025 due primarily to a decrease in reserves related to existing tax positions. Although the Company’s estimate for the potential outcome for any uncertain tax issue is highly judgmental, management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for. However, future results may include favorable or unfavorable adjustments to estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current estimates. As a result, the Company’s effective tax rate may fluctuate significantly on a quarterly basis. The Company has operations and pays taxes in many countries outside of the U.S. and taxes on those earnings are subject to varying rates. The Company is not dependent upon the favorable benefit of any one jurisdiction to an extent that the loss of such benefit would have a material effect on the Company’s overall effective tax rate. Note 15: Leases The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, and warehouses), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines). The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company’s lease contracts is performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842, “Leases.” Most of the Company’s real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five years . The Company’s leases do not have any significant residual value guarantees or restrictive covenants. As the implicit rate in the Company’s leases is normally not readily determinable, the Company generally calculates its lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate, which contemplates and reflects a particular geographical region’s interest rate for the leases active within that region of the Company’s global operations. The Company further utilizes a portfolio approach by assigning a “short” rate to contracts with lease terms of 10 years or less and a “long” rate for contracts greater than 10 years. The Company completed the Eviosys acquisition on December 4, 2024. The acquisition included operating lease liabilities of $ 42,468 with a weighted-average remaining lease maturity term of 8.1 years and a weighted-average discount rate of 4.5 % . For additional information about this acquisition, see Note 4. The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at March 30, 2025 and December 31, 2024: 30 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Classification Balance Sheet Location March 30, 2025 December 31, 2024 Lease Assets Operating lease assets Right of Use Asset - Operating Leases $ 329,601 $ 307,688 Finance lease assets Other Assets 64,224 76,831 Total lease assets $ 393,825 $ 384,519 Lease Liabilities Current operating lease liabilities Accrued expenses and other $ 57,123 $ 52,648 Current finance lease liabilities Notes payable and current portion of long-term debt 24,373 22,284 Total current lease liabilities $ 81,496 $ 74,932 Noncurrent operating lease liabilities Noncurrent Operating Lease Liabilities $ 277,932 $ 258,735 Noncurrent finance lease liabilities Long-term Debt, net of current portion 35,502 45,344 Total noncurrent lease liabilities $ 313,434 $ 304,079 Total lease liabilities $ 394,930 $ 379,011 Certain of the Company’s leases include variable costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, and also non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the right of use assets recorded on the balance sheet were determined based upon factors considered at the commencement date of the leases, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet for certain leases with rate or index-related terms result in variable expenses being incurred when paid during the lease term. The following table sets forth the components of the Company’s total lease cost for the three-month periods ended March 30, 2025 and March 31, 2024: Three Months Ended Lease Cost March 30, 2025 March 31, 2024 Operating lease cost (a) $ 15,484 $ 13,370 Finance lease cost: Amortization of lease asset (a) 3,002 3,085 Interest on lease liabilities (b) 700 921 Variable lease cost (a) (c) 12,422 6,597 Impairment charges (d) 633 — Total lease cost $ 32,241 $ 23,973 (a) Production-related costs are included in “Cost of sales” and administrative costs are included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Income. (b) Included in “Interest expense” in the Condensed Consolidated Statements of Income. (c) Also includes short term lease costs, which are deemed immaterial . (d) Impairment charges are included in “Restructuring/asset impairment charges” in the Company’s Condensed Consolidated Statements of Income. See Note 6 for additional information. 31 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table sets forth certain lease-related information for the three-month periods ended March 30, 2025 and March 31, 2024: Three Months Ended March 30, 2025 March 31, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used by operating leases $ 14,226 $ 11,411 Operating cash flows used by finance leases $ 700 $ 921 Financing cash flows used by finance leases $ 3,057 $ 3,684 Noncash investing and financing activities: Leased assets obtained in exchange for new operating lease liabilities $ 11,011 $ 26,432 Leased assets obtained in exchange for new finance lease liabilities $ 2,279 $ 2,042 Modification to leased assets for increase in operating lease liabilities $ 16,626 $ 4,171 Modification to leased assets for increase/(decrease) in finance lease liabilities $ ( 10,440 ) $ — Termination reclasses to decrease operating lease assets $ ( 232 ) $ ( 1,103 ) Termination reclasses to decrease operating lease liabilities $ ( 274 ) $ ( 1,316 ) Termination reclasses to decrease finance lease assets $ ( 82 ) $ — Termination reclasses to decrease finance lease liabilities $ ( 84 ) $ — Note 16: Revenue Recognition The Company records revenue when control is transferred to the customer, which is either upon shipment or over time in cases where the Company is entitled to payment with margin for products produced that are customer specific without alternative use. The Company recognizes over time revenue under the input method as goods are produced. Revenue that is recognized at a point in time is recognized when the customer obtains control of the goods. Customers obtain control either when goods are delivered to the customer facility, if the Company is responsible for arranging transportation, or when picked up by the customer’s designated carrier. The Company commonly enters into Master Supply Arrangements with customers to provide goods and/or services over specific time periods. Customers submit purchase orders with quantities and prices to create a contract for accounting purposes. Shipping and handling expenses are included in “Cost of sales,” and freight charged to customers is included in “Net sales” in the Company’s Condensed Consolidated Statements of Income. The Company has rebate agreements with certain customers. These rebates are recorded as reductions of revenue and are accrued using sales data and rebate percentages specific to each customer agreement. Accrued customer rebates are included in “Accrued expenses and other” in the Company’s Condensed Consolidated Balance Sheets. Payment terms under the Company’s sales arrangements are short term, generally no longer than 120 days. The Company does provide prompt payment discounts to certain customers if invoices are paid within a predetermined period. Prompt payment discounts are treated as a reduction of estimated revenue and are determinable within a short time period following the sale. The following table sets forth the effects of contract assets and liabilities from contracts with customers. Contract assets and liabilities are reported in “Other receivables” and “Accrued expenses and other,” respectively, in the Company’s Condensed Consolidated Balance Sheets. March 30, 2025 December 31, 2024 Contract Assets $ 80,294 $ 67,062 Contract Liabilities ( 43,428 ) ( 60,024 ) 32 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Significant changes in the contract assets and liabilities balances during the three-month period ended March 30, 2025 and the year ended December 31, 2024 were as follows: March 30, 2025 December 31, 2024 Contract Asset Contract Liability Contract Asset Contract Liability Beginning Balance $ 67,062 $ ( 60,024 ) $ 14,754 $ ( 15,252 ) Acquired as part of a business combination — — 62,439 ( 47,478 ) Revenue deferred or rebates accrued — ( 11,812 ) — ( 25,736 ) Recognized as revenue — 500 — 2,341 Rebates paid to customers — 27,908 — 26,101 Increases due to rights to consideration for customer specific goods produced, but not billed during the period 80,294 — 67,062 — Transferred to receivables from contract assets recognized at the beginning of the period and acquired as part of business combination ( 67,062 ) — ( 77,193 ) — Ending Balance $ 80,294 $ ( 43,428 ) $ 67,062 $ ( 60,024 ) Contract assets represent goods produced without alternative use for which the Company is entitled to payment with margin prior to shipment. Upon shipment, the Company is entitled to bill the customer, and therefore amounts included in contract assets will be reduced with the recording of an account receivable as they represent an unconditional right to payment. Contract liabilities represent revenue deferred due to pricing mechanisms utilized by the Company in certain multi-year arrangements, volume rebates, and receipts of advance payments. For multi-year arrangements with pricing mechanisms, the Company will generally defer revenue during the first half of the arrangement and will release the deferral over the second half of the contract term. Contract assets and liabilities are generally short in duration given the nature of products produced by the Company. The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended March 30, 2025 and March 31, 2024. The tables also include a reconciliation of disaggregated revenue with reportable segments. The Company’s reportable segments are aligned by product nature as disclosed in Note 17 . Three-month period ended March 30, 2025 Consumer Packaging Industrial Paper Packaging All Other Total Primary Geographical Markets: United States $ 448,034 $ 357,586 $ 69,478 $ 875,098 Europe, Middle East and Africa (EMEA) 567,024 86,109 14,473 667,606 Canada 3,865 21,434 — 25,299 Asia Pacific 24,639 35,837 251 60,727 Other 23,031 56,743 724 80,498 Total $ 1,066,593 $ 557,709 $ 84,926 $ 1,709,228 33 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Three-month period ended March 31, 2024 Consumer Packaging Industrial Paper Packaging All Other Total Primary Geographical Markets: United States $ 422,592 $ 354,366 $ 109,568 $ 886,526 Europe, Middle East and Africa (EMEA) 105,136 97,700 14,390 217,226 Canada 3,903 24,770 — 28,673 Asia Pacific 24,463 56,950 354 81,767 Other 25,576 59,274 9,594 94,444 Total $ 581,670 $ 593,060 $ 133,906 $ 1,308,636 Note 17: Segment Reporting 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. The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper, steel and plastic containers; and metal and peelable membrane ends, closures, and components. The primary products produced and sold within the Industrial Paper Packaging segment include paperboard tubes, cones, and cores; paper-based protective packaging; and uncoated recycled paperboard. The primary products produced within the All Other group of businesses consist of a variety of packaging materials, including plastic, paper, foam, and various other specialty materials. The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The CODM assesses segment performance and allocates resources to each segment by using each segment’s operating profit. The CODM uses operating profit for each segment in the annual budgeting and forecasting process and reviews segment operating profit quarterly when making decisions about allocating capital and operating resources to segments. Disaggregated assets by segment are not disclosed since segment assets are not regularly provided to the CODM. Segment operating profit viewed by the Company to evaluate segment performance does not include the following: restructuring/asset impairment charges; amortization of acquisition intangibles; gains/losses from the sale of businesses or other assets; acquisition, integration and divestiture-related costs; changes in last-in, first-out (“LIFO”) inventory reserves; derivative gains/losses; or certain other items, if any, the exclusion of which the Company’s management believes improves the comparability and analysis of the ongoing operating performance of the business. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and the All Other group of businesses, except for costs related to discontinued operations. 34 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table sets forth financial information about each of the Company’s reportable segments: SEGMENT FINANCIAL INFORMATION Three-month period ended March 30, 2025 Consumer Packaging Industrial Paper Packaging Total Reportable Segments Sales from external customers $ 1,066,593 $ 557,709 $ 1,624,302 Intersegment sales (1) 2,769 27,015 29,784 $ 1,069,362 $ 584,724 $ 1,654,086 Reconciliation of sales Other sales (2) 86,289 Elimination of intersegment sales ( 31,147 ) Total consolidated sales $ 1,709,228 Less: (3) Cost of sales (4) ( 853,732 ) ( 421,983 ) Other segment items (5) ( 74,859 ) ( 91,617 ) Segment operating profit $ 140,771 $ 71,124 $ 211,895 Other segment disclosures: Equity in (loss)/earnings of affiliates, net of tax $ ( 51 ) $ 1,972 Depreciation, depletion and amortization (6) $ 48,955 $ 28,333 (1) Intersegment sales are recorded at a market-related transfer price. (2) Sales from businesses below the quantitative threshold are attributable to the group of businesses within All Other. (3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. (4) Cost of sales of reportable segments excludes certain costs, primarily changes in LIFO inventory reserves, net gains or losses from derivatives, and acquisition, integration and divestiture-related costs. (5) Other segment items consists of: Consumer Packaging: Labor and benefits, consulting and professional services, travel, communication, facilities and supplies. Industrial Paper Packaging: Labor and benefits, consulting and professional services, travel, communication, facilities and supplies. (6) Represents significant segment expenses that are regularly provided to the CODM and are included in cost of sales and other segment items within segment operating profit. 35 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) 36 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) Three-month period ended March 31, 2024 Consumer Packaging Industrial Paper Packaging Total Reportable Segments Sales from external customers $ 581,670 $ 593,060 $ 1,174,730 Intersegment sales (1) 1,775 28,417 $ 30,192 $ 583,445 $ 621,477 $ 1,204,922 Reconciliation of sales Other sales (2) 135,697 Elimination of intersegment sales ( 31,983 ) Total consolidated sales $ 1,308,636 Less: (3) Cost of sales (4) ( 479,490 ) ( 459,134 ) Other segment items (5) ( 45,388 ) ( 96,499 ) Segment operating profit $ 58,567 $ 65,844 $ 124,411 Other segment disclosures: Equity in earnings of affiliates, net of tax $ 13 $ 1,124 Depreciation, depletion and amortization (6) $ 24,897 $ 28,503 (1) Intersegment sales are recorded at a market-related transfer price. (2) Sales from businesses below the quantitative threshold are attributable to the group of businesses within All Other. (3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. (4) Cost of sales of reportable segments excludes certain costs, primarily changes in LIFO inventory reserves, net gains or losses from derivatives, and acquisition, integration and divestiture-related costs. (5) Other segment items consists of: Consumer Packaging: Labor and benefits, consulting and professional services, travel, communication, facilities and supplies. Industrial Paper Packaging: Labor and benefits, consulting and professional services, travel, communication, facilities and supplies. (6) Represents significant segment expenses that are regularly provided to the CODM and are included in cost of sales and other segment items within segment operating profit. 37 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table sets forth the reconciliation of segment operating profit to “Income from continuing operations before income taxes” for the periods presented. Three Months Ended March 30, 2025 March 31, 2024 Segment operating profit $ 211,895 $ 124,411 Other operating profits (1) 11,926 17,125 Unallocated amounts: Restructuring/Asset impairment charges ( 13,581 ) ( 31,010 ) Amortization of acquisition intangibles ( 41,961 ) ( 17,894 ) Loss from divestiture of business and other assets ( 4,183 ) — Acquisition, integration and divestiture-related costs ( 27,266 ) ( 5,504 ) Changes in LIFO inventory reserves ( 562 ) ( 431 ) Derivative gains 2,949 286 Other corporate costs (2) ( 11,098 ) ( 11,088 ) Other operating charges, net (3) ( 1,259 ) ( 3,323 ) Other expenses, net (4) ( 6,517 ) — Non-operating pension costs ( 3,121 ) ( 3,295 ) Interest expense ( 56,027 ) ( 30,164 ) Interest income 7,348 3,133 Income from continuing operations before income taxes $ 68,543 $ 42,246 (1) Operating profit from segments below the quantitative threshold are attributable to the group of businesses within All Other. (2) Other corporate costs represent recurring operating expenses previously allocated to TFP that will remain with Sonoco subsequent to the divestiture. (3) Primarily consists of highly inflationary accounting in Turkey and other miscellaneous charges in both 2025 and 2024. (4) These expenses relate to charges from third-party financial institutions related to the Company’s centralized treasury program under which the Company sells certain trade accounts receivables in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment. 38 SONOCO PRODUCTS COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in thousands except per share data) (unaudited) The following table sets forth the reconciliation of other segment disclosures to consolidated totals for the periods presented. Three Months Ended March 30, 2025 March 31, 2024 Equity in (loss)/earnings of affiliates, net of tax Consumer Packaging $ ( 51 ) $ 13 Industrial Paper Packaging 1,972 1,124 Reportable Segment Total 1,921 1,137 Adjustments — — Consolidated Total $ 1,921 $ 1,137 Depreciation, depletion and amortization Consumer Packaging $ 48,955 $ 24,897 Industrial Paper Packaging 28,333 28,503 Reportable Segment Total 77,288 53,400 Other (1) 44,515 21,546 Consolidated Total $ 121,803 $ 74,946 (1) Other represents depreciation, depletion and amortization expense for the All Other group of businesses and total amortization of acquisition intangibles for Sonoco, excluding discontinued operations. Note 18: Commitments and Contingencies In accordance with the requirements of ASC 450, “Contingencies,” the Company records accruals for estimated losses at the time information becomes available indicating that losses are probable and that the amounts are reasonably estimable. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings from a variety of sources. Some of these exposures, as discussed below, have the potential to be material. Environmental Matters The Company is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates. Spartanburg In connection with its acquisition of Tegrant in November 2011, the Co mpany identified potential environmental contamination at a site in Spartanburg, South Carolina. Since the acquisition, the Company has spent a total of $ 2,345 on remediation of the Spartanburg site. At March 30, 2025 and December 31, 2024, the Company’s accrual for environmental contingencies related to the Spartanburg site totaled $ 5,055 and $ 5,096 , respectively. The Spartanburg site and related environmental liabilities were part of the sale of TFP to Toppan, which was completed on April 1, 2025, subsequent to the end of the first quarter. Accordingly, these accruals are reflected in “Current liabilities of discontinued operations” on the Company’s Condensed Consolidated Balance Sheets. Other environmental matters The Company has been named as a potentially responsible party at several other environmentally contaminated sites. All of the sites are also the responsibility of other parties. The potential remediation liabilities are shared with such other parties, and, in most cases, the Company’s share, if any, cannot be reasonably estimated at the current time. However, the Company does not believe that the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company’s fi nancial statements. At March 30, 2025 and December 31, 2024, the Company’s accrual for these other sites totaled $ 1,807 and $ 1,933 , respectively , and are included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets. 39 SONOCO PRODUCTS COMPANY Other Legal Matters In addition to those matters described above, the Company is subject to other various legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters could differ from management’s expectations, the Company does not believe the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company’s financial statements. 40 SONOCO PRODUCTS COMPANY