What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 380 added, 160 removed, 438 unchanged (55% of the section changed)

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• supply chain disruptions and availability and supply of raw materials and energy, and offsetting high raw material, energy, and logistics costs;

• the effects of economic downturns, changing tariffs or trade policy, inflation, volatility and other macroeconomic factors on the Company and its industry, including the Company’s ability to manage such matters and their effects on consumers and customers;

• the resiliency of the Company’s operating model;

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• financial and business strategies and the results expected of them;

• producing improvements in earnings;

• profitable sales growth and rates of growth;

• producing improvements in earnings and profitable sales growth and rates of growth;

• market opportunities and anticipated growth thereof;

• expected impact and costs of resolution of legal proceedings;

• expected impact of new and changing regulations;

• extent and adequacy of provisions for, environmental liabilities and the cost of compliance with environmental laws and regulations;

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• ability to successfully integrate newly acquired businesses, including Eviosys, into the Company’s operations, retain key employees, maintain relationships with customers and other third parties, and realize expected cost savings, synergies and other anticipated benefits relating thereto within the expected time period, or at all;

• availability, transportation and pricing of raw materials, energy and transportation, including the impact of changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine and between the United States and Iran and elsewhere in the Middle East, the potential escalation of tensions between China and Taiwan, and recent events in Venezuela), and the Company’s ability to continue to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;

• costs of labor and employment, including the cost of employee and retiree medical, health, and life insurance benefits and the impact of any work stoppages due to labor disputes;

• availability, transportation and pricing of raw materials, energy and transportation, including the impact of changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflicts between Russia and Ukraine and between the United States and Iran and elsewhere in the Middle East, the potential escalation of tensions between China and Taiwan, and recent events in Venezuela), and the Company’s ability to continue to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;

• costs of labor and employment, including costs relating to employee benefits and any labor disputes;

• success of new product development, introduction and sales, including successful timing of new product or product innovation introductions and success of implementation of new manufacturing technologies, installation of manufacturing equipment, the startup of new facilities and lines, and integration of artificial intelligence (“AI”) to drive productivity and efficiency;

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• ability to maintain or increase productivity levels, contain or reduce costs, and maintain positive price/cost relationships.

including through ongoing organizational efforts;

• ability to negotiate or retain contracts with customers, including in segments with concentration of sales volume;

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• the adoption of new, or changes in, accounting standards or interpretations;

SONOCO PRODUCTS COMPANY

• accuracy of assumptions underlying projections related to goodwill impairment testing, and accuracy of management’s assessment of goodwill impairment;

SONOCO PRODUCTS COMPANY

• accuracy of assumptions underlying fair value measurements, accuracy of management’s assessments of fair value and fluctuations in fair value;

• ability to maintain effective disclosure controls and internal controls, including with regard to financial reporting, to prevent or detect errors or acts of fraud;

• liability for and costs of resolution of litigation, regulatory actions, or other legal proceedings;

• liability for and anticipated costs of environmental remediation actions;

• effects of environmental laws and regulations, including with respect to climate change and emissions reporting;

• liability for and anticipated costs of resolution of litigation, regulatory actions or other legal proceedings or environmental remediation actions;

• effects of changing climate and greenhouse gas effects and environmental laws and regulations, including with respect to climate change and emissions reporting;

• operational disruptions at our major facilities;

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• ability to protect our intellectual property rights;

• changing climate and greenhouse gas effects;

• ability to meet environmental, sustainability and other similar goals;

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This new facility represents a strategic investment that is expected to support growing demand across Asia while advancing the Company’s innovation in sustainable packaging and utilizing advanced production systems designed for efficiency, speed and consistency.

The Company is planning to invest $20 million in its Industrial Paper Packaging segment to add new nailed wood reel production capacity at the Company’s Hartselle, Alabama, facility to help meet growing wire and cable infrastructure demand to support artificial intelligence data centers.

The Company is investing $20.0 million in its Industrial Paper Packaging segment to add new nailed wood and steel reel production capacities at the Company’s Hartselle, Alabama, facilities to help meet growing wire and cable infrastructure demand to support AI data centers and other electrical grid investments.

This expansion is expected to be completed before the end of 2026.

SONOCO PRODUCTS COMPANY

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Global Trade Developments

Recent developments in U.S.

Ongoing developments in U.S.

and foreign trade policy have increased uncertainty for the global economy and the Company’s business.

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After imposing this tariff, the U.S.

government allowed for the temporary exemption from the tariff for any goods that comply with the USMCA, which has helped mitigate the impact of the tariff on the Company’s operations in North America.

government allowed for the temporary exemption from the tariff for any goods that comply with the United States-Mexico-Canada Agreement (“USMCA”), which has helped mitigate the impact of the tariff on the Company’s operations in North America.

On February 10, 2025, the United States announced the expansion of Section 232 Tariffs on steel and aluminum imported into the United States, effective March 12, 2025, and the termination of the granting of new exclusions to mitigate these tariffs.

As a result, imported steel and aluminum originating from most countries is currently subject to a 50% duty.

The United States also imposed reciprocal tariffs at a baseline rate of 10%, effective April 5, 2025, and later set firmly established tariff rates for various countries at the beginning of August 2025.

government also imposed reciprocal tariffs at a baseline rate of 10%, effective April 5, 2025, and later set firmly established tariff rates for various countries at the beginning of August 2025.

For the most part, these reciprocal tariffs were incremental increases over the previously established 10% temporary reciprocal tariffs.

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Customs and Border Protection launched an electronic system to manage refunds for tariffs paid under the International Emergency Economic Powers Act (“IEEPA”).

The Company will seek refund of all eligible IEEPA tariffs;

however, the amount of any such recovery is not expected to be material.

The Company has applied for refunds of all eligible IEEPA tariffs and has recovered approximately 80% of its overall claim as of the end of the second quarter of 2026.

The amount of the recoveries to date has not been material nor are any future recoveries expected to be material.

Effective April 6, 2026, the United States overhauled Section 232 tariffs on steel and aluminum moving from a metal-content-based assessment to the full customs value of the imported goods.

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While the Company is actively working with its customers to help manage the impacts of higher input costs driven by tariffs, its business model allows for pricing adjustments when necessary.

In addition, the Company believes its transformed portfolio following the Eviosys acquisition and the sales of TFP and ThermoSafe is significantly more resilient, with nearly two-thirds of the Company’s sales in 2025 coming from the Consumer Packaging segment, a segment that has historically demonstrated strong performance across economic cycles.

In addition, the Company believes its transformed portfolio following the Eviosys acquisition and the divestitures of its TFP and ThermoSafe businesses is significantly more resilient, with nearly two-thirds of the Company’s sales in 2025 and the first half of 2026 coming from the Consumer Packaging segment, a segment that has historically demonstrated strong performance across economic cycles.

In addition, while the Section 232 Tariffs impact input costs for the Company’s U.S.-based operations with Consumer Packaging, Americas, which source a portion of their steel and aluminum purchases from outside the United States, the Company intends, and has the contractual ability, to continue to pass such increases in cost due to tariffs to its customers.

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The Company relies on a diversified global supplier base for resin, chemicals, adhesives, and other inputs, some of which are indirectly influenced by crude-oil-linked pricing or international transportation costs.

As a result of this geopolitical and macroeconomic uncertainty, the Company expects to experience increases in cost of sales from these higher input costs, as well as higher energy and logistics costs, including higher fuel surcharges.

While the Company will seek to reduce the potential impact on its customers, it is anticipated that such increases will be passed to our customers and that these cost pressures will not materially impact the Company’s ability to source materials, operate facilities, or meet customer demand.

Based on information currently available, the Company does not expect these factors to materially impact its near-term financial performance.

As a result of this geopolitical and macroeconomic uncertainty, the Company expects inflation related to input costs, energy, and logistics to persist over the second half of 2026;

however, it does not expect these co st pressures to materially impact the Company’s ability to source materials, operate facilities, or meet customer demand.

The Company does not expect these factors to materially impact its near-term financial performance based on cost recovery actions through recognized market price increases and contractual price resets.

However, the duration and broader economic consequences of the conflict, including the potential for further increases in energy and logistics costs, remain uncertain.

The Company will continue to evaluate developments in the geopolitical environment and adjust its risk management strategies as conditions evolve.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”), which includes a broad range of tax reform provisions, including the extension of key provisions of the Tax Cuts and Jobs Act of 2017, was signed into law in the United States.

The Company has evaluated the impact of the OBBBA as part of its projected 2026 results, and the effects of the legislation are reflected in its income tax provision for the quarter.

While certain provisions of the OBBBA are expected to have a favorable impact on the Company’s income tax profile, the Company does not currently anticipate that the OBBBA will have a material effect on its effective tax rate, financial results or cash flows for 2026.

The Company will continue to monitor and assess the application of the OBBBA and any related regulatory guidance as it becomes available.

The Company will continue to evaluate developments in the geopolitical environment and adjust its risk management strategies as appropriate.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA"), which includes a broad range of tax reform provisions and extends or modifies certain provisions of prior tax legislation, was signed into law in the United States.

The Company evaluated the effects of the OBBBA in accordance with ASC 740 and determined that enactment of the legislation did not result in a material adjustment to its income tax accounts upon enactment.

Based on the Company’s assessment, the OBBBA is not expected to have a material impact on the Company’s consolidated effective tax rate, results of operations, financial position or cash flows for 2026.

While certain provisions of the OBBBA are expected to provide future tax benefits, largely through acceleration of deductions to benefit cash taxes, the overall impact is not currently expected to be material.

The Company will continue to monitor the implementation of the OBBBA and related regulatory, administrative and interpretive guidance and will evaluate the effects of any such guidance as it becomes available.

RESULTS OF OPERATIONS

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SONOCO PRODUCTS COMPANY

First Quarter 2026 Compared with First Quarter 2025

The following discussion provides a review of results for the three-month period ended March 29, 2026 versus the three-month period ended March 30, 2025.

Consolidated net sales for the first quarter of 2026 were $1.7 billion, a $(32.8) million or 1.9% decline from the first quarter of 2025.

Lower volumes resulted in lower sales in the first quarter of 2026 of $(97.8) million compared to the same period last year as macroeconomic and geopolitical pressures weighed on both the Company’s supply chain and its customers and the November 2025 divestiture of ThermoSafe further reduced sales by $(55.8) million.

These decreases were partially offset by a favorable impact from foreign currency translation of $87.1 million and a $38.7 million benefit from higher selling prices implemented to offset the effects of inflation and tariffs.

All other factors contributed to a net reduction of $(5.0) million in the first quarter of 2026 compared to the same period last year.

GAAP operating profit for the first quarter of 2026 was $127.1 million, an increase of 0.2% from the $126.9 million reported in the first quarter of 2025.

The increase in GAAP operating profit was primarily due to productivity savings from fixed cost reduction initiatives totaling $4.6 million, lower losses on the sale of businesses of $2.3 million, and other net favorable impacts of $0.5 million.

These favorable items were partially offset by the impact of the ThermoSafe divestiture of $(7.2) million.

Adjusted Operating Profit for the first quarter of 2026 was $200.8 million, a decrease of (5.6)% from the $212.7 million reported for the same period in 2025, primarily resulting from the impact of the ThermoSafe divestiture.

GAAP net i ncome attributable to Sonoco for the first quarter of 2026 increased to $67.6 million, or $0.68 per diluted share, compared to $54.4 million, or $0.55 per diluted share, for the first quarter of 2025.

This increase was primarily due to the increase in GAAP operating profit described above, and lower net interest expense and provision for income taxes as described more fully below, partially offset by the decrease in GAAP net income from discontinued operations resulting from the April 1, 2025 sale of TFP and higher Other expense, net in the current year as described below.

Adjusted net income attributable to Sonoco and Adjusted diluted EPS for the first quarter of 2026 were $119.4 million (or $1.20 per diluted share), compared with $136.8 million (or $1.38 per diluted share) for the same period in 2025.

The decrease is primarily attributable to the sale of TFP.

Second Quarter 2026 Compared with Second Quarter 2025

The following discussion provides a review of results for the three-month period ended June 28, 2026 versus the three-month period ended June 29, 2025.

Consolidated net sales for the second quarter of 2026 were $1.9 billion, a $(25.0) million or (1.3)% decline from the second quarter of 2025.

The November 2025 divestiture of ThermoSafe reduced sales by $(65.7) million in the second quarter of 2026 compared to the same period last year while lower volumes further reduced sales by $(22.9) million as continuing macroeconomic and geopolitical pressures weighed on both the Company’s supply chain and its customers.

These decreases were partially offset by a $37.0 million benefit from higher selling prices implemented to offset the effects of inflation and tariffs and the favorable impact from foreign currency translation of $29.3 million.

All other factors contributed to a net reduction of $(2.7) million in the second quarter of 2026 compared to the same period last year.

GAAP operating profit for the second quarter of 2026 was $192.8 million, an increase of 9.8% from the $175.7 million reported in the second quarter of 2025.

The increase in GAAP operating profit was primarily due to productivity savings from fixed cost reduction initiatives and procurement savings of $18.7 million, lower acquisition, integration and divestiture-related costs of $9.1 million, lower restructuring costs of $7.8 million, higher gains on the sale of businesses of $4.7 million, and the net favorable impact of foreign currency translation and other items totaling $5.1 million.

These favorable impacts were partially offset by unfavorable price/cost of $(11.8) million, the impact of the ThermoSafe divestiture of $(8.9) million, and unfavorable volume/mix of $(7.6) million.

Adjusted Operating Profit for the second quarter of 2026 was $242.4 million, a decrease of (1.8)% from the $246.9 million reported for the same period in 2025, primarily resulting from the impact of the ThermoSafe divestiture.

GAAP net income attributable to Sonoco for the second quarter of 2026 decreased to $104.9 million, or $1.05 per diluted share, compared to $493.4 million, or $4.96 per diluted share, for the second quarter of 2025.

The quarter-over-quarter reduction was primarily due to net income from discontinued operations in the prior year of $424.5 million related to the April 2025 divestiture of TFP.

The impact of this reduction was partially offset by the increase in GAAP operating profit as described above and lower net interest expense, as described more fully below.

Adjusted net income attributable to Sonoco and Adjusted diluted EPS for the second quarter of 2026 were $150.5 million (or $1.51 per diluted share), compared with $136.1 million (or $1.37 per diluted share) for the same period in 2025.

Costs and Expenses

Cost of goods sold decreased by $(24.7) million, or 1.8%, in the first quarter of 2026 compared with the first quarter of 2025.

This decrease resulted from a $(40.3) million impact from the divestiture of ThermoSafe, lower labor costs of $(18.8) million, and the nonrecurrence of inventory step-up amortization recognized in the first quarter of 2025 in connection with the Eviosys acquisition of $(17.9) million.

These decreases were partially offset by higher direct material costs and outbound freight costs of $44.1 million and $6.9 million, respectively.

Gross profit margins decreased slightly from 20.7% in the first quarter of 2025 to 20.6% in the first quarter of 2026 .

Selling, general and administrative costs decreased by $(7.5) million, or 3.6%, and were 12.0% of sales in the first quarter of 2026, compared to 12.2% of sales in the first quarter of 2025.

This decrease reflects reduced costs of $(7.6) million from the ThermoSafe divestiture and lower acquisition, integration, and divestiture-related costs of $(2.9) million, partially offset by net increases, primarily salaries and benefits, totaling $3.0 million.

Restructuring/Asset impairment charges totaled $15.1 million in the first quarter of 2026, compared with $13.6 million during the same period last year.

The charges in the current year related primarily to ongoing restructuring costs related to prior year plant closures and headcount eliminations in conjunction with the Company’s ongoing organizational effectiveness efforts.

Cost of sales decreased by $(11.1) million, or (0.7)%, in the second quarter of 2026 compared with the second quarter of 2025.

This decrease resulted from a $(49.0) million impact from the divestiture of ThermoSafe and lower labor costs of $(18.4) million, partially offset by higher direct material costs of $36.9 million and higher outbound freight costs of $20.5 million.

Other favorable factors resulted in a net reduction in cost of sales totaling $(1.1) million.

Gross profit margins decreased slightly to 20.8% in the second quarter of 2026 from 21.3% in the second quarter of 2025 .

Selling, general and administrative costs decreased by $(18.5) million, or (8.5)%, and were 10.6% of sales in the second quarter of 2026, compared to 11.5% of sales in the second quarter of 2025.

This decrease reflects lower acquisition, integration, and divestiture-related costs of $(9.1) million, reduced costs from the ThermoSafe divestiture of $(7.8) million, and other net decreases, primarily salaries and benefits, totaling $(1.6) million.

Restructuring/Asset impairment charges totaled $1.9 million in the second quarter of 2026, compared with $9.8 million during the same period last year.

The net charges in the current year related primarily to ongoing costs related to prior year plant closures and headcount eliminations in conjunction with the Company’s ongoing organizational effectiveness efforts, partially offset by reductions resulting from revisions to the estimates of total severance to be paid.

Additional information regarding restructuring and asset impairment charges is provided in Note 6 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Loss on divestiture of business totaled $1.9 million in the first quarter of 2026 reflecting a charge related to the final working capital settlement for the ThermoSafe divestiture.

Loss on divestiture of business of $4.2 million during the first quarter of 2025 reflected a $5.4 million loss from the sale of the Company’s tube and core operations in Venezuela, partially offset by a $1.2 million gain from the sale of a small construction tube operation in France, both part of the Industrial Paper Packaging segment.

Gain/(Loss) on divestiture of business in the second quarter of 2026 and 2025 was a gain of $2.6 million from the sale of the Company’s recycling operations in Savannah, Georgia, and a loss of $(2.1) million from the sale of the Company’s recycling operations in Asheville, North Carolina, respectively.

These operations were part of the Industrial Paper Packaging segment.

See Note 4 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

SONOCO PRODUCTS COMPANY

Other expense, net was $12.3 million and $6.5 million in the first quarter of 2026 and 2025, respectively.

Other expense, net wa s $6.2 million and $6.6 million in the second quarter of 2026 and 2025, respectively.

The amounts in both years are comprised of charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within our Consumer Packaging segment.

Other expense, net in the first quarter of 2026 also includes non-operating charges related to certain pre-acquisition liabilities relevant to the Sonoco Metal Packaging (“SMP”) EMEA business.

Net interest expense for the first quarter of 2026 decreased to $35.8 million, compared with $48.7 million during the first quarter of 2025, primarily due to lower average debt levels resulting from the Company’s repayment of debt during 2025 utilizing proceeds from the divestitures of TFP and ThermoSafe.

The effective tax rates on GAAP income from continuing operations before income taxes and Adjusted income from continuing operations before income taxes in the first quarter of 2026 were 12.4% and 25.5%, respectively, compared with 30.9% and 25.7%, respectively, in the corresponding prior year quarter.

The decrease in the GAAP effective tax rate was primarily from a provision-to-return adjustment related to a retroactive U.S.

tax election.

Non-operating pension costs decreased by $(0.1) million during the second quarter of 2026 versus the same period last year.

The decrease is primarily due to higher expected return on plan assets and lower interest charges, partially offset by higher settlement and curtailment charges.

Additional information regarding costs of the Company’s retirement plans is provided in Note 13 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Net interest expense for the second quarter of 2026 decreased to $41.4 million, compared with $60.2 million during the second quarter of 2025, primarily due to lower average debt levels resulting from the Company’s repayment of debt during 2025 utilizing proceeds from the divestitures of TFP and ThermoSafe.

The effective tax rates on GAAP income from continuing operations before income taxes and Adjusted income from continuing operations before income taxes in the second quarter of 2026 were 27.8% and 23.8%, respectively, compared with 37.3% and 25.6%, respectively, in the corresponding prior year quarter.

The decrease in the GAAP effective tax rate was primarily due to the absence of non-GAAP adjustments for restructuring and other discrete one-time items which were present in 2025.

Discontinued Operations

Net income from discontinued operations totaled $5.2 million in the first quarter of 2025.

The sale of TFP was completed on April 1, 2025.

Net income from discontinued operations totaled $424.5 million in the second quarter of 2025, reflecting the net after-tax gain on divestiture of business recognized upon completion of the sale of TFP on April 1, 2025.

Reportable Segments

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

During 2025, the All Other group of businesses consisted of ThermoSafe and the Company’s industrial and specialty plastics business (“Industrial Plastics”).

During 2025, the All Other group of businesses consisted of ThermoSafe and Industrial Plastics.

With the divestiture of ThermoSafe in November 2025, only Industrial Plastics remained.

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Results for prior periods have been revised to conform with the current presentation.

The following table summarizes net sales attributable to each of the Company’s segments for the first quarters of 2026 and 2025 and the All Other group of businesses for the first quarter of 2025:

The following table summarizes net sales attributable to each of the Company’s segments for the second quarters of 2026 and 2025 and the All Other group of businesses for the second quarter of 2025:

Three Months Ended

(Dollars in thousands) March 29, 2026 March 30, 2025 %

(Dollars in thousands) June 28, 2026 June 29, 2025 %

Consumer Packaging $ 1,241,839 $ 1,227,033 1.2 %

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SONOCO PRODUCTS COMPANY

The following table summarizes operating profit attributable to each of the Company’s reportable segments, and Corporate-related activity for the first quarters of 2026 and 2025 and the All Other group of businesses for the first quarter of 2025:

The following table summarizes operating profit attributable to each of the Company’s reportable segments, and Corporate-related activity for the second quarters of 2026 and 2025 and the All Other group of businesses for the second quarter of 2025:

Three Months Ended

(Dollars in thousands) March 29, 2026 March 30, 2025 %

(Dollars in thousands) June 28, 2026 June 29, 2025 %

Operating profit:

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All Other — 8,406 (100.0) %

Restructuring/Asset impairment charges (15,133) (13,581)

Restructuring/Asset impairment charges, net (1,933) (9,752)

Amortization of acquisition intangibles (45,570) (44,193)

Loss on divestiture of business (1,865) (4,183)

Gain/(Loss) on divestiture of business 2,640 (2,083)

Acquisition, integration and divestiture-related costs (2,083) (11,161)

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These products primarily serve the consumer staples market, focused on food, beverage, household, personal, and pharmaceutical products.

Segment net sales increased $30.5 million, or 2.9%, over the prior year quarter as the favorable impact of foreign exchange rates added $67.7 million and price increases implemented to offset the effects of inflation and tariffs added approximately $27.6 million of sales.

These favorable factors were partially offset by softer volume/mix across the segment of $(61.6) million related to macroeconomic conditions and the impact of severe winter weather along the east coast of the United States in the first quarter of 2026.

Segment operating profit decreased compared to the corresponding prior year quarter primarily due to softer volumes, partially offset by the benefits from productivity savings and a favorable price/cost environment.

Segment operating profit margin were 11.5% and 13.2% in the first quarter of 2026 and 2025, respectively.

Segment net sales increased $14.8 million, or 1.2%, over the prior year quarter as the favorable impact of foreign exchange rates added $20.3 million and price increases implemented to recover inflation and tariff-related costs added approximately $18.9 million of sales.

These favorable factors were partially offset by softer volume/mix across the segment of $(22.1) million as higher paper can volumes in EMEA/APAC due to rising snack demand were more than offset by lower demand for metal aerosol cans and sealant tubes.

Other unfavorable factors reduced quarter-over-quarter sales by $(2.3) million.

Segment operating profit decreased (5.4)% compared to the corresponding quarter last year, though continued productivity and disciplined cost management helped mitigate the impact of softer volumes.

Segment operating profit margin was 12.2% and 13.1% in the second quarter of 2026 and 2025, respectively.

Industrial Paper Packaging

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Products across this segment support end markets, primarily in paper, textile, and films.

Segment net sales decreased $(8.2) million, or (1.4)%, from the corresponding prior year quarter as lower volume/mix across the segment reduced sales by $(36.2) million, partially offset by the favorable impact of foreign exchange rates of $18.7 million and price gains of $11.2 million resulting from index-based pricing resets.

All other factors contributed to a reduction of $(1.9) million in the first quarter of 2026 compared with the same period last year.

Segment operating profit decreased compared to the corresponding prior year quarter primarily due to lower volume/mix and losses attributable to a fire at a recycling facility in Greenville, South Carolina.

These unfavorable factors were partially offset by strong productivity savings.

Segment operating profit margin decreased to 12.0% in the first quarter of 2026 from 13.0% in the same period last year.

Segment net sales increased $26.0 million, or 4.2% , from the corresponding prior year quarter as price gains resulting from index-based pricing resets added $18.1 million of sales and the favorable impact of foreign exchange rates added $8.8 million, while the segment’s volume/mix was flat.

All other factors contributed to a net reduction in sales of $(0.9) million in the second quarter of 2026 compared with the same period last year.

Segment operating profit increased 4.0% compared to the corresponding quarter last year primarily due to the impact of productivity savings from fixed cost reduction initiatives and procurement savings, and favorable mill utilization in North America.

These favorable factors were partially offset by unfavorable price/cost from rising material, freight and other operating costs.

Segment operating profit margin was 13.9% in both the second quarter of 2026 and 2025.

Net sales and operating profit reported for All Other in 2025 relate to the Company’s ThermoSafe business, which was sold in November 2025.

SONOCO PRODUCTS COMPANY

Six Months Ended June 28, 2026 Compared with Six Months Ended June 29, 2025

The following discussion provides a review of results for the six-month period ended June 28, 2026 compared with the six-month period ended June 29, 2025.

Consolidated net sales for the first six months of 2026 were $3.6 billion, a $(57.7) million or (1.6)% decline from the same period last year.

The November 2025 divestiture of ThermoSafe reduced year-over-year sales by $(120.9) million in the first six months of 2026 compared to the same period last year while lower volumes further reduced year-over-year sales by $(120.8) million as macroeconomic and geopolitical pressures weighed on both the Company’s supply chain and its customers.

These decreases were partially offset by a $75.8 million benefit from higher selling prices implemented to offset the effects of inflation and tariffs and the favorable impact from foreign currency translation of $116.4 million.

All other factors contributed to a net reduction of $(8.2) million in the first six months of 2026 compared to the same period last year.

GAAP operating profit for the first six months of 2026 was $319.9 million, an increase of 5.8% from the $302.5 million reported for the first six months of 2025.

The increase in GAAP operating profit was primarily due to productivity savings from fixed cost reduction initiatives and procurement savings of $24.2 million, lower acquisition, integration and divestiture-related costs of $30.0 million, the favorable impact of foreign currency translation of $15.3 million, higher gains on the sale of businesses of $7.0 million, and lower restructuring costs of $6.3 million.

These favorable impacts were partially offset by unfavorable volume/mix of $(50.7) million, the impact of the ThermoSafe divestiture of $(16.1) million, and unfavorable price/cost of $(4.8) million.

All other items comprised a net favorable year-over-year impact of $6.2 million.

Adjusted operating profit for the first six months of 2026 was $443.2 million, a decrease of (3.6)% from the $459.7 million reported for the same period in 2025.

GAAP net income attributable to Sonoco for the first six months of 2026 decreased to $172.5 million, or $1.73 per diluted share, compared to $547.9 million, or $5.51 per diluted share, reported for the same period of 2025.

The year-over-year reduction was primarily due to net income from discontinued operations in the prior year of $429.7 million related to the April 2025 divestiture of TFP.

The impact of this reduction was partially offset by the increase in GAAP operating profit as described above, lower interest expense, and the impact of a lower GAAP effective tax rate in the current year.

Adjusted net income attributable to Sonoco and Adjusted diluted EPS for the six-month period ended June 28, 2026 decreased (1.1)% to $269.9 million, or $2.71 per diluted share, from $273.0 million, or $2.74 per diluted share, in the six-month period ended June 29, 2025.

Costs and Expenses

Cost of sales decreased by $(35.8) million, or (1.3)%, in the first six months of 2026 compared with the first six months of 2025.

This year-over-year decrease resulted from a $(89.3) million impact from the divestiture of ThermoSafe, lower labor costs of $(37.3) million, and the non-recurrence of inventory step-up amortization totaling $(18.0) million related to the Company’s December 2024 acquisition of Eviosys.

Partially offsetting these decreases were higher year-over-year direct material and outbound freight costs of $81.0 million and $27.5 million, respectively.

Other factors resulted in a net increase in cost of sales totaling $0.3 million.

Gross profit margins were 20.7% for the first six months of 2026 and 21.0% for the first six months of 2025 .

Selling, general and administrative costs for the first six months of 2026 decreased $(26.1) million, or (6.1)%, year over year.

This decrease reflects lower acquisition, integration, and divestiture-related costs of $(12.0) million, reduced costs from the ThermoSafe divestiture of $(15.4) million, and other net increases, primarily salaries and benefits, totaling $1.3 million.

Restructuring/Asset impairment charges totaled $17.1 million during the first six months of 2026, compared with $23.3 million during the same period last year.

Restructuring charges in the first six months of 2025 included higher costs related to the closures of cone facilities in Taiwan and Mexico and a metal packaging facility in Spain.

The net charges in the current year related primarily to ongoing costs related to these and other prior-year plant closures and headcount eliminations in conjunction with the Company’s ongoing organizational effectiveness efforts, partially offset by reductions resulting from revisions to the estimates of total severance to be paid.

SONOCO PRODUCTS COMPANY

Gain/(Loss) on divestiture of business during the first six months of 2026 was a net gain of $0.8 million reflecting a $2.6 million gain from the sale of the Company’s recycling operations in Savannah, Georgia, part of the Industrial Packaging segment , partially offset by a $(1.9) million charge related to the final working capital settlement for the ThermoSafe divestiture.

Gain/(Loss) on divestiture of business during the first six months of 2025 was a net loss of $(6.3) million reflecting losses from the sales of the Company’s tube and core operations in Venezuela and recycling operations in Asheville, North Carolina, of $(5.4) million and $(2.1) million, respectively, partially offset by a gain of $1.2 million from the sale of a small construction tube operation in France, all part of the Industrial Paper Packaging segment.

See Note 4 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Other expense, net during the first six months of 2026 and 2025 was $18.5 million and $13.1 million, respectively.

Other expense, net in the first six months of 2026 also includes $6.6 million of non-operating charges related to certain pre-acquisition liabilities related to the Sonoco Metal Packaging (“SMP”) EMEA business.

Non-operating pension costs decreased by $(0.7) million during the first six months year over year.

The decrease is primarily due to higher expected return on plan assets, lower interest and amortization charges, partially offset by higher settlement and curtailment charges during the first six months of 2026.

GAAP net interest expense during the first six months of 2026 decreased to $77.3 million, compared with $108.9 million during the first six months of 2025.

The decrease of $(31.7) million was primarily due to lower average debt levels resulting from the Company’s repayment of debt during 2025 utilizing proceeds from the divestitures of TFP and ThermoSafe.

The effective tax rates on GAAP income from continuing operations before income taxes and Adjusted income from continuing operations before income taxes in the first six months of 2026 were 22.4% and 24.6%, respectively, compared with 34.8% and 25.7%, respectively, in the prior-year period.

The decrease in the GAAP effective tax rate was primarily due to the recording of a provision-to-return adjustment for a retroactive U.S.

tax election in the first quarter of 2026, as well as the absence of discrete one-time items which were present in 2025.

Discontinued Operations

Net income from discontinued operations totaled $429.7 million in the first six months of 2025, reflecting the net after-tax gain on divestiture of business of $424.5 million recognized upon completion of the sale of TFP on April 1, 2025 and $5.2 million of net income earned by the operation in the period prior to the sale.

SONOCO PRODUCTS COMPANY

Reportable Segments

The following table summarizes net sales attributable to each of the Company’s reportable segments, and the All Other group of businesses during the first six months of 2026 and 2025:

Six Months Ended

(Dollars in thousands) June 28, 2026 June 29, 2025 % Change

Consumer Packaging $ 2,338,914 $ 2,293,626 2.0 %

Industrial Paper Packaging 1,223,013 1,205,193 1.5 %

Total reportable segments 3,561,927 3,498,819 1.8 %

All Other — 120,850 (100.0) %

Net sales $ 3,561,927 $ 3,619,669 (1.6) %

The following table summarizes operating profit attributable to each of the Company’s reportable segments, the All Other group of businesses, and Corporate-related activity during the first six months of 2026 and 2025:

Six Months Ended

(Dollars in thousands) June 28, 2026 June 29, 2025 % Change

Operating profit:

Consumer Packaging $ 277,354 $ 301,124 (7.9) %

Industrial Paper Packaging 158,625 162,265 (2.2) %

Segment operating profit 435,979 463,389 (5.9) %

All Other — 15,125 (100.0) %

Restructuring/Asset impairment charges, net (17,066) (23,333)

Amortization of acquisition intangibles (89,890) (86,154)

Gain/(Loss) on divestiture of business 775 (6,266)

Acquisition, integration and divestiture-related costs (8,421) (38,427)

Other operating charges, net (1,448) (21,807)

Operating profit $ 319,929 $ 302,527 5.8 %

Consumer Packaging

Segment net sales increased $45.3 million , or 2.0%, year to date compared to the prior-year period as the favorable impact of foreign exchange rates added $88.0 million and price increases implemented to offset the effects of inflation and tariffs added approximately $46.5 million of year-over-year sales.

These favorable factors were partially offset by lower volume/mix across the segment of $(83.7) million as higher paper can volumes in EMEA/APAC due to rising snack demand were more than offset by lower demand for metal aerosol cans and sealant tubes.

Other unfavorable factors reduced year-over-year sales by $(5.5) million.

Year-to-date segment operating profit decreased $(23.8) million, or (7.9)%, as productivity, cost containment savings, and the favorable impact of foreign exchange rates were offset by softer volumes.

As a result, segment operating profit margin decreased to 11.9% in the first six months of 2026 from 13.1% in the same period last year.

Industrial Paper Packaging

Segment net sales increased 1.5% year to date compared to the prior-year period as higher selling prices resulting from index-based pricing resets added $29.3 million of year-over-year sales and the favorable impact of foreign exchange rates added $27.5 million.

These favorable factors were partially offset by unfavorable volume/mix of $(37.1) million.

All other factors contributed to a net reduction in sales of $(1.9) million in the first six months of 2026 compared with the same period last year.

SONOCO PRODUCTS COMPANY

Segment operating profit decreased (2.2)% versus the prior-year period primarily as a result of lower volume/mix and unfavorable price/cost, as well as losses in the first six months of 2026 attributable to fires at recycling facilities in Greenville and Spartanburg, South Carolina.

These unfavorable factors were partially offset by productivity savings from fixed cost reduction initiatives and procurement savings and the favorable impact from foreign exchange rates.

As a result, segment operating margin decreased to 13.0% in the first six months of 2026 from 13.5% in the same period last year.

Net sales and operating profit reported for All Other in 2025 relate to the Company’s ThermoSafe business, which was sold in November 2025.

SONOCO PRODUCTS COMPANY

NON-GAAP FINANCIAL MEASURES

45 unchanged sentences

Quarterly Reconciliations of GAAP to Non-GAAP Financial Measures

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for the three-month periods ended March 29, 2026 and March 30, 2025.

Adjusted Operating Profit, Adjusted Income from Continuing Operations Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS

For the three-month period ended March 29, 2026

For the three-month period ended June 28, 2026

Dollars in thousands, except per share data Operating Profit Income from Continuing Operations Before Income Taxes Provision for Income Taxes Net Income Attributable to Sonoco Diluted EPS

5 unchanged sentences

Restructuring/Asset impairment charges, net 1,933 1,940 17 1,930 0.02

Loss on divestiture of business 2

1,865 1,865 462 1,403 0.01

Other expense, net 3

Gain on divestiture of business 2

(2,640) (2,640) (650) (1,990) (0.02)

Non-operating pension costs — 2,920 749 2,171 0.02

Net gains from derivatives (87) (87) (22) (65) —

Net losses from derivatives 254 254 63 191 —

Other adjustments 1,231 1,231 (3,417) 4,648 0.05

1,796 1,796 14,104 (12,308) (0.13)

Total adjustments 49,585 52,512 6,886 45,633 0.46

1 unchanged sentence

Due to rounding, individual items may not sum appropriately.

1 Acquisition, integration and divestiture-related costs relate primarily to the Company’s December 2024 acquisition of Eviosys, the April 2025 divestiture of TFP and the November 2025 divestiture of ThermoSafe.

2 Loss on divestiture of business reflects the final net working capital settlement related to the November 2025 divestiture of ThermoSafe.

3 Amount relates to certain pre-acquisition liabilities relevant to the SMP EMEA business.

4 Other adjustments to the provision for income taxes include a benefit of $14,232 related to a provision-to-return adjustment for a retroactive U.S.

tax election.

1 Acquisition, integration and divestiture-related costs relate primarily to the Company’s December 2024 acquisition of Eviosys.

2 Gain on divestiture of business reflects the gain of $2,640 from the sale of a recycling facility in Savannah, Georgia.

SONOCO PRODUCTS COMPANY

For the three-month period ended March 30, 2025

For the three-month period ended June 29, 2025

Dollars in thousands, except per share data Operating Profit Income from Continuing Operations Before Income Taxes Provision for Income Taxes Net Income Attributable to Sonoco Diluted EPS

6 unchanged sentences

Restructuring/Asset impairment charges, net 9,752 9,752 2,197 7,173 0.07

Loss on divestiture of business 4,183 4,183 372 3,811 0.04

Loss/(Gain) on divestiture of business 2,083 2,083 514 (422,979) (4.25)

Non-operating pension costs — 2,982 761 2,221 0.02

Net gains from derivatives (2,949) (2,949) (744) (2,205) (0.02)

Net losses from derivatives 2,154 2,154 548 1,606 0.02

Other adjustments 3

5 unchanged sentences

2 Acquisition, integration and divestiture-related costs relate mostly to the Company’s December 2024 acquisition of Eviosys and the divestiture of TFP, which was completed on April 1, 2025.

3 Other adjustments include discrete tax items primarily related to a $3,500 tax expense due to the reduction of the deferred tax asset on the outside basis of certain held-for-sale entities.

3 Other adjustments include discrete tax items primarily related to tax rate changes on accumulated other comprehensive income (“AOCI”) and rate differences between non-US jurisdictions related to acquisitions/divestitures.

Adjusted EBITDA 1

Three Months Ended

Dollars in thousands March 29, 2026 March 30, 2025

Dollars in thousands June 28, 2026 June 29, 2025

Net income attributable to Sonoco $ 104,894 $ 493,423

4 unchanged sentences

Non-operating pension costs 2,920 2,982

Non-operating other expense 2

Net income attributable to noncontrolling interests 24 60

Net income/(loss) attributable to noncontrolling interests 130 (224)

Restructuring/Asset impairment charges, net 1,933 9,752

Changes in LIFO inventory reserves 1,154 1,193

Loss on divestiture of business 1,865 4,183

Gain on divestiture of business (2,640) (623,690)

Acquisition, integration and divestiture-related costs 2,083 11,161

Net gain from derivatives (87) (2,949)

Net loss from derivatives 254 2,154

Other non-GAAP adjustments 1,231 735

Adjusted EBITDA $ 324,020 $ 327,931

1 For the period ended March 30, 2025, Adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.

2 Amount relates to certain pre-acquisition liabilities relevant to the SMP EMEA business.

1 For the three-month period ended June 29, 2025, Adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.

SONOCO PRODUCTS COMPANY

21 unchanged sentences

Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation

For the Three Months Ended March 29, 2026

For the Three Months Ended June 28, 2026

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

5 unchanged sentences

— — (6,191) (6,191)

Equity in (loss)/earnings of affiliates, net of tax (2) 692 — 690

Equity in earnings of affiliates, net of tax 276 1,987 — 2,263

Restructuring/Asset impairment charges, net 4

4 unchanged sentences

— — 2,083 2,083

Loss on divestiture of business 7

— — 1,865 1,865

Net gain from derivatives 8

Gain on divestiture of business 7

— — (2,640) (2,640)

Net loss from derivatives 8

Other non-GAAP adjustments — — 1,231 1,231

10 unchanged sentences

5 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $1,143 and the Industrial Paper Packaging segment of $11.

6 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $643.

7 Included in Corporate is a loss of $1,865 from the divestiture of ThermoSafe, previously part of the All Other group of businesses.

8 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(8) and the Industrial Paper Packaging segment of $(79).

6 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $2,631 and the Industrial Paper Packaging segment of $152.

7 Included in Corporate is a gain of $2,640 from the sale of a recycling operation in Savannah, Georgia, part of the Industrial Paper Packaging segment.

8 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $12 and the Industrial Paper Packaging segment of $242.

Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation

For the Three Months Ended March 30, 2025

For the Three Months Ended June 29, 2025

Excludes results of discontinued operations

5 unchanged sentences

— — — (6,559) (6,559)

Equity in (loss)/earnings of affiliates, net of tax (51) 1,972 — — 1,921

Equity in earnings of affiliates, net of tax 170 2,100 — — 2,270

Restructuring/Asset impairment charges, net 3

6 unchanged sentences

— — — 2,083 2,083

Net gains from derivatives 7

Net loss from derivatives 7

— — — 2,154 2,154

9 unchanged sentences

5 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $1,137 and the Industrial Paper Packaging segment of $213.

6 Included in Corporate are losses from the divestiture of businesses associated with the Industrial Paper Packaging segment of $4,183 related to the sale of a production facility in France and the entirety of our business in Venezuela.

7 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(284), the Industrial Paper Packaging segment of $(2,552), and the All Other group of businesses of $(113).

6 Included in Corporate is a loss on divestiture of business of $2,083 associated with the Industrial Paper Packaging segment related to the sale of a recycling operation in Asheville, North Carolina.

7 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $208, the Industrial Paper Packaging segment of $1,864, and the All Other group of businesses of $82.

SONOCO PRODUCTS COMPANY

Year-to-Date Reconciliations of GAAP to Non-GAAP Financial Measures

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for the six-month periods ended June 28, 2026 and June 29, 2025.

Adjusted Operating Profit, Adjusted Income from Continuing Operations Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted EPS

For the six-month period ended June 28, 2026

Dollars in thousands, except per share data Operating Profit Income from Continuing Operations Before Income Taxes Provision for Income Taxes Net Income Attributable to Sonoco

As Reported (GAAP) $ 319,929 $ 218,757 $ 49,061 $ 172,495 $ 1.73

Acquisition, integration and divestiture-related costs 1

8,421 8,421 1,347 7,074 0.07

Changes in LIFO inventory reserves 5,521 5,521 1,367 4,154 0.04

Amortization of acquisition intangibles 89,890 89,890 19,800 70,090 0.70

Restructuring/Asset impairment charges, net 17,066 17,066 3,505 13,573 0.14

Gain on divestiture of business, net 2

(775) (775) (188) (587) (0.01)

Other expense, net 3

— 6,592 — 6,592 0.07

Non-operating pension costs — 5,416 1,394 4,022 0.04

Net loss from derivatives 167 167 41 126 —

Other adjustments 4

3,027 3,027 10,687 (7,660) (0.07)

Total adjustments 123,317 135,325 37,953 97,384 0.98

Adjusted $ 443,246 $ 354,082 $ 87,014 $ 269,879 $ 2.71

Due to rounding, individual items may not sum appropriately.

1 Acquisition, integration and divestiture-related costs relate primarily to the Company’s December 2024 acquisition of Eviosys and the November 2025 divestiture of ThermoSafe.

2 Gain on divestiture of business, net reflects the gain of $2,640 from the sale of a recycling operation in Savannah, Georgia, partially offset by a charge of $1,865 from the final net working capital settlement related to the November 2025 divestiture of ThermoSafe.

3 Amount relates to certain pre-acquisition liabilities related to the SMP EMEA business.

4 Other adjustments to the provision for income taxes include a benefit of $14,232 related to a provision-to-return adjustment for a retroactive U.S.

tax election.

SONOCO PRODUCTS COMPANY

For the six-month period ended June 29, 2025

Dollars in thousands, except per share data Operating Profit Income from Continuing Operations Before Income Taxes Provision for Income Taxes Net Income Attributable to Sonoco Diluted EPS

As Reported (GAAP) 1

$ 302,527 $ 174,424 $ 60,647 $ 547,852 $ 5.51

Acquisition, integration and divestiture-related costs 2

38,427 38,427 8,757 39,336 0.40

Changes in LIFO inventory reserves 1,755 1,755 433 1,322 0.01

Amortization of acquisition intangibles 86,154 86,154 19,005 66,936 0.67

Restructuring/Asset impairment charges, net 23,333 23,333 5,397 17,888 0.18

Loss/(Gain) on divestiture of business 3

6,266 6,266 886 (419,168) (4.21)

Non-operating pension costs — 6,103 1,559 4,544 0.05

Net gains from derivatives (795) (795) (196) (599) (0.01)

Other adjustments 4

1,994 1,994 (9,804) 14,844 0.14

Total adjustments 157,134 163,237 26,037 (274,897) (2.77)

Adjusted $ 459,661 $ 337,661 $ 86,684 $ 272,955 $ 2.74

Due to rounding, individual items may not sum appropriately.

1 Operating profit, income from continuing operations before income taxes, and provision for income taxes exclude results related to discontinued operations of $663,564, $638,752, and $209,032, respectively.

2 Acquisition, integration and divestiture related costs relate mostly to the Company’s December 2024 acquisition of Eviosys and the April 2025 divestiture of TFP.

3 Loss/(gain) on divestiture of business primarily consists of the gain on the sale of the Company’s Thermoformed and Flexibles Packaging business, included in “Net income from discontinued operations” in the Company’s Condensed Consolidated Statements of Income.

4 Other adjustments include discrete tax items primarily related to tax rate changes on AOCI and rate differences between non-U.S.

jurisdictions related to acquisitions/divestitures.

SONOCO PRODUCTS COMPANY

Adjusted EBITDA 1

Six Months Ended

Dollars in thousands June 28, 2026 June 29, 2025

Net income attributable to Sonoco $ 172,495 $ 547,852

Interest expense 89,972 145,305

Interest income (12,715) (11,751)

Provision for income taxes 49,061 269,679

Depreciation and amortization 256,125 250,967

Non-operating pension costs 5,416 6,103

Non-operating other expense 6,592 —

Net income/(loss) attributable to noncontrolling interests 154 (164)

Restructuring/Asset impairment charges, net

17,066 23,759

Changes in LIFO inventory reserves 5,521 1,755

Gain on divestiture of business (775) (619,507)

Acquisition, integration and divestiture-related costs 8,421 51,103

Net loss/(gain) from derivatives 167 (795)

Other non-GAAP adjustments 3,027 1,381

Adjusted EBITDA $ 600,527 $ 665,687

1 For the six-month period ended June 29, 2025 , Adjusted EBITDA is calculated on a total Company basis, including both continuing and discontinued operations.

The following tables reconcile segment operating profit, the closest GAAP measure of profitability, to Segment Adjusted EBITDA.

Segment Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation

For the Six Months Ended June 28, 2026

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

Segment and Total Operating Profit 1

$ 277,354 $ 158,625 $ (116,050) $ 319,929

Depreciation and amortization 2

105,625 60,610 89,890 256,125

Other expense, net 3

— — (11,907) (11,907)

Equity in earnings of affiliates, net of tax 274 2,679 — 2,953

Restructuring/Asset impairment charges, net 4

— — 17,066 17,066

Changes in LIFO inventory reserves 5

— — 5,521 5,521

Acquisition, integration and divestiture-related costs 6

— — 8,421 8,421

Gain on divestiture of business 7

— — (775) (775)

Net loss from derivatives 8

Other non-GAAP adjustments — — 3,027 3,027

Segment Adjusted EBITDA $ 383,253 $ 221,914 $ (4,640) $ 600,527

Net Sales $ 2,338,914 $ 1,223,013

Segment Operating Profit Margin 11.9 % 13.0 %

Segment Adjusted EBITDA Margin 16.4 % 18.1 %

SONOCO PRODUCTS COMPANY

1 As pre viously announced, effective January 1, 2026, results for Industrial Plastics, previously included in the All Other group of businesses, are included in the Industrial Paper Packaging segment.

The Company no longer reports the results of any of its businesses in All Other.

2 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $79,875 and the Industrial Paper Packaging segment of $10,015.

3 These expenses relate to charges from third-party financial institutions related to our centralized treasury program under which the Company sells certain trade accounts receivable in order to accelerate its cash collection cycle, primarily within the Consumer Packaging segment.

4 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $8,937 and the Industrial Paper Packaging segment of $7,196.

5 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $4,996 and the Industrial Paper Packaging segment of $525.

6 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $3,274 and the Industrial Paper Packaging segment of $152.

7 Included in Corporate is a gain of $2,640 from the sale of a recycling facility in Savannah, Georgia, part of the Industrial Paper Packaging segment, partially offset by a charge of $1,865 from the divestiture of ThermoSafe, previously part of the All Other group of businesses.

8 Included in Corporate are net losses from derivatives associated with the Consumer Packaging segment of $4 and the Industrial Paper Packaging segment of $163.

Segment and All Other Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation

For the Six Months Ended June 29, 2025

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

Segment and Total Operating Profit $ 301,124 $ 162,265 $ 15,125 $ (175,987) $ 302,527

Depreciation and amortization 1

101,756 59,868 3,500 86,154 251,278

Other expense, net 2

— — — (13,076) (13,076)

Equity in earnings of affiliates, net of tax 119 4,072 — — 4,191

Restructuring/Asset impairment charges, net 3

— — — 23,333 23,333

Changes in LIFO inventory reserves 4

— — — 1,755 1,755

Acquisition, integration and divestiture-related costs 5

— — — 38,427 38,427

Loss on divestiture of business 6

— — — 6,266 6,266

Net gains from derivatives 7

— — — (795) (795)

Other non-GAAP adjustments — — — 1,994 1,994

Segment Adjusted EBITDA $ 402,999 $ 226,205 $ 18,625 $ (31,929) $ 615,900

Net Sales $ 2,293,626 $ 1,205,193 $ 120,850

Segment Operating Profit Margin 13.1 % 13.5 % 12.5 %

Segment Adjusted EBITDA Margin 17.6 % 18.8 % 15.4 %

1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $74,835, the Industrial Paper Packaging segment of $10,920, and the All Other group of businesses of $399.

2 These expenses relate to charges from third-party financial institutions related to our 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.

3 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $2,709, the Industrial Paper Packaging segment of $20,726, and the All Other group of businesses of $10.

SONOCO PRODUCTS COMPANY

4 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $1,755.

5 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $21,209 and the Industrial Paper Packaging segment of $431.

6 Included in Corporate are net losses on the divestiture of businesses associated with the Industrial Paper Packaging segment of $6,266, including a loss of $2,083 from the sale of a recycling facility in Asheville, N.C.

and losses totaling $4,183 related to the sale of a production facility in France and the entirety of our business in Venezuela.

7 Included in Corporate are net gains from derivatives associated with the Consumer Packaging segment of $(76), the Industrial Paper Packaging segment of $(688), and the All Other group of businesses of $(31).

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Operating activities used cas h of $367.9 million and $208.1 million in the first three months of 2026 and 2025, respectively, a higher year-over-year use of cash of $159.8 million.

GAAP net income increased by $13.1 million year over year, primarily as a result of lower year-over-year acquisition, integration, and divestiture-related costs, partially offset by higher depreciation and amortization costs.

Net working capital used $244.3 million of cash in the first three months of 2026, while using $309.4 million in the same period of 2025, for a lower year-over-year use of cash of $65.1 million .

Accounts receivable used $7.5 million less cash during the first three months of 2026 than in the same period of 2025 as a result of a changing mix in customer payment terms and strong focus on cash management.

Inventory used cash of $105.7 million in the first three months of 2026, while using $110.2 million in the same period of 2025 due to higher overall inventory levels, mainly in tinplate steel, reflecting the impacts of both inflation and seasonality.

Accounts payable used cash of $81.8 million and $134.9 million in the first three months of 2026 and 2025, respectively.

The lower use of cash was due to timing of purchases and scheduled payments.

The Company has continued to actively manage inventories and payment terms with customers and suppliers to both address risk and balance economic benefit.

Accrued expenses and other assets and liabilities used $153.4 million and $100.2 million of cash in the first three months of 2026 and 2025, respectively, for a greater year-over-year use of cash of $53.1 million.

The primary driver contributing to the change was higher cash payments made under the transition services agreement with the buyer of TFP, of $72.0 million, of which $36.7 million is included in Other receivables at March 29, 2026 and expected to be reimbursed to the Company during the second quarter of 2026.

Other drivers included year-over-year increases in payments related to acquisition/divestiture-related costs of $6.6 million and restructuring actions of $3.7 million, partially offset by lower year-over-year interest payments of $4.9 million and management incentive compensation of $2.9 million.

Additionally, prepaid expenses used $48.1 million and $0.9 million of cash in 2026 and 2025, respectively, reflecting higher year-over-year advance payments for steel purchases from China.

Income taxes payable and other income tax items used $122.2 million of cash in first three months of 2026, compared to providing $16.7 million of cash in the same period of 2025, primarily due to the payment of taxes during the quarter on the gains from the 2025 divestitures of TFP and ThermoSafe.

Investing activities used $76.1 million and $88.6 million of cash in the first three months of 2026 and 2025, respectively, for a lower year-over-year use of cash of $12.5 million.

Capital expenditures during the first three months of 2026 totaled $62.1 million, a decrease of $30.6 million from the prior year.

Net proceeds from the sale of businesses during the first three months of 2026 reflect the Company’s payment of final net working capital settlements of $15.2 million and $1.9 million to the buyers of TFP and ThermoSafe, respectively.

Proceeds from these acquisitions were received in April 2025 and November 2025, respectively.

Net proceeds from the sale of businesses in the first three months of 2025 reflect $2.0 million of proceeds related to the July 1, 2023 sale of the Company’s U.S.

BulkSak business released from escrow in February 2025 and $1.5 million of proceeds from the sale of a small construction tube operation in France.

Financing activities provided $302.2 million and $29.6 million of cash in the first three months of 2026 and 2025, respectively.

The primary driver of the year-over-year change was higher net borrowings during the first three months of 2026.

Net borrowings, primarily from the issuance of commercial paper, provided $359.0 million of cash during the first three months of 2026, while providing $79.2 million during the same period last year.

Net borrowing in the prior year reflected proceeds from the issuance of commercial paper of $528.0 million, partially offset by $448.8 million in net debt repayments, including the repayment upon maturity of the $400 million aggregate principal amount of the Company’s 1.800% note s due February 2025.

Operating activities used cas h o f $67.3 million and $14.7 million in the first six months of 2026 and 2025, respectively, a higher year-over-year use of cash of $52.7 million.

GAAP net income decreased by $375.0 million year over year, primarily as a result of the gain on the divestiture of TFP included in the prior year’s results and higher year-over-year depreciation and amortization costs, partially offset by lower year-over-year acquisition, integration, and divestiture-related costs .

Accounts receivable used $113.0 million more cash during the first six months of 2026 than in the same period of 2025.

The majority of the change arose in the second quarter of 2026 as a result of higher daily trade sales in June compared to March and an increase in daily sales outstanding resulting from a changing mix in customer payment terms.

The Company continues to focus on cash management and expects accounts receivable reductions over the remainder of 2026.

Inventories used cash of $152.1 million in the first six months of 2026, while using $203.8 million in the same period of 2025.

The significant use of cash in the first six months of both years resulted from increased inventory levels, mainly in tinplate steel, reflecting the impacts of both inflation and seasonality.

The increase was greater in the prior year as inventory levels at SMP EMEA were lower at the end of 2024 following our acquisition of Eviosys on December 4, 2024.

Payable to suppliers provided cash of $31.6 million and $8.1 million in the first six months of 2026 and 2025, respectively.

The higher provision of cash in 2026 was due to timing of purchases and scheduled payme nts.

The Company has continued to actively manage inventories and payment terms with customers and suppliers to both address risk and balance economic benefit amidst a challenging ma croeconomic and geopolitical environment.

Accrued expenses and other assets and liabilities used $78.1 million and $98.2 million of cash in the first six months of 2026 and 2025, respectively, for a lower year-over-year use of cash of $20.0 million.

The primary drivers contributing to the change were lower year-over-year interest accruals, an increase in collection of miscellaneous non-trade receivables, and lower payments for management incentive compensation, partially offset by higher year-over-year cash payments for acquisition, integration and divestiture-related costs and restructuring actions.

Additionally, prepaid expenses used $33.6 million of cash in 2026 and provided $9.0 million of cash in 2025, a year-over-year change of $42.6 million, primarily resulting from higher advance payments for steel purchases from China.

Income taxes payable and other income tax items used $100.7 million of cash in the first six months of 2026, compared to providing $197.7 million of cash in the same period of 2025, primarily due to the payment of taxes during the first six months of 2026 on the gains from the 2025 divestitures of TFP and ThermoSafe.

Investing activities used $132.5 million of cash in the first six months of 2026 and provided $1,645.3 million of cash in the first six months of 2025.

The year-over-year reduction of $1,777.8 million was primarily the result of lower net proceeds from the sale of businesses.

During the first six months of 2025, the Company received net cash proceeds totaling $1,807.5 million from the sale of TFP in addition to proceeds totaling $7.4 million from other divestitures.

Net proceeds from the sale of businesses during the first six months of 2026 included $4.0 million of cash proceeds from the sale of a recycling facility in Savannah, Georgia, offset by cash payments for final net working capital settlements related to the 2025 divestitures of TFP and ThermoSafe, totaling $15.2 million and $1.9 million, respectively.

Cost of acquisitions, net of cash acquired, in the first six months of 2025 included a final working capital settlement of $16.5 million related to the December 2024 acquisition of Eviosys.

Capital expenditures during the first six months of 2026 totaled $125.8 million, a decrease of $61.7 million from the same period last year.

The reduction reflects the Company’s intention of maintaining capital expenditures at approximately 4% of sales in order to preserve balance sheet flexibility, support debt reduction, and maintain a focus on core growth.

Investments in affiliated companies and other net investing proceeds provided a $4.2 million year-over-year increase in cash related to proceeds from company-owned life insurance and dividends from an affiliated company representing a return of capital.

Financing activities provided $7.1 million of cash in the first six months of 2026 and used $1,776.8 million of cash in the first six months of 2025.

Net borrowings during the first six months of 2026, primarily from the issuance of commercial paper, provided $116.6 million of cash, whereas net debt repayments during the first six months of 2025, used $1,668.9

SONOCO PRODUCTS COMPANY

Net debt repayments in the prior year included the repayment upon maturity of the $400 million aggregate principal amount of the Company’s 1.800% note s due February 2025, largely funded by commercial paper borrowings, and the April 2025 repayment of the outstanding $1,500 million principal amount of borrowings under the Company’s 364-day term loan facility and a portion of the Company’s outstanding commercial paper borrowings using cash proceeds from the sale of TFP.

The change in book cash overdrafts was a lower year-over-year provision of cash of $2.6 million.

Cash used to pay dividends increased by $2.2 million year over year, reflecting the increase in the quarterly dividend payment from $0.53 per share to $0.54 per share approved by the Company’s Board of Directors in April 2026.

Cash used to repurchase the Company’s common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $7.0 million in the three-month period ended March 29, 2026, compared to $10.6 million in the corresponding prior-year period.

During th e three-month period ended March 29, 2026, the Company reported a net decrease in cash and cash equivalents of $12.1 million due to currency translation adjustments resulting from a stronger U.S.

Cash used to repurchase the Company’s common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $7.0 million in the six-month period ended June 28, 2026, compared to $10.6 million in the corresponding prior-year period.

During th e six-month period ended June 28, 2026, the Company reported a net decrease in cash and cash equivalents of $17.1 million due to currency translation adjustments resulting from a stronger U.S.

dollar relative to certain foreign currencies, principally the euro, in which the Company’s cash and cash equivalents were held.

SONOCO PRODUCTS COMPANY

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

At March 29, 2026 and December 31, 2025, approximately $207.1 million and $193.3 million, respectively, of the Company’s reported cash and cash equivalents balances of $224.5 million and $378.4 million, respectively, were held outside of the United States by its foreign subsidiaries.

At June 28, 2026 and December 31, 2025, approximately $148.6 million and $193.3 million, respectively, of the Company’s reported cash and cash equivalents balances of $168.6 million and $378.4 million, respectively, were held outside of the United States by its foreign subsidiaries.

Cash held outside of the United States is available to meet local liquidity needs or for capital expenditures, acquisitions, and other offshore growth opportunities.

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The Company’s $1.25 billion commercial paper program is supported by the revolving credit facility.

At March 29, 2026 , the Company had $344 million in commercial paper balances outstanding;

accordingly, the committed capacity available for drawdown under its revolving credit facility at March 29, 2026 was $906 million.

At June 28, 2026 , the Company had $116 million in commercial paper balances outstanding;

accordingly, the committed capacity available for drawdown under its revolving credit facility at June 28, 2026 was $1.134 billion.

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

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Borrowings under the Term Loan Facility, net of any prepayments, will become payable in full on the second anniversary of the Funding Date (as defined in the Term Credit Agreement) and will bear interest at a fluctuating rate per annum equal to, at the Company’s option, (i) the forward-looking Secured Overnight Financing Rate term rate (such borrowings, “Term SOFR Loans”), (ii) a base rate (such borrowings, “Base Rate Loans”), or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on the Company’s credit ratings, ranging from 0.850% to 1.100% per annum for Term SOFR Loans and from 0.000% to 0.100% per annum for Base Rate Loans.

As of March 29, 2026 , no draws had been made under the Term Loan Facility.

At March 29, 2026, the Company had scheduled debt maturities of approximately $1.2 billion over the next twelve months.

As of June 28, 2026 , no draws had been made under the Term Loan Facility.

At June 28, 2026, the Company had scheduled debt maturities of approximately $968.8 million over the next twelve months.

The Company believes cash on hand and available credit, including the Term Loan Facility, combined with expected net cash flows generated from operating and investing activities, will provide sufficient liquidity to cover these and other cash flow needs of the Company over the next twelve months and beyond.

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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 29, 2026 , the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

As of June 28, 2026 , the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

SONOCO PRODUCTS COMPANY

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

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Future funding requirements beyond the current year will vary depending largely on investment performance, future actuarial assumptions, and legislative actions.

SONOCO PRODUCTS COMPANY

Fair Value Measurements, Foreign Exchange Exposure and Risk Management

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dollars with changes recorded through earnings.

The cumulative impact of applying highly inflationary accounting to Turk ey has been a pretax charge to earnings of $9.5 million ($7.3 million after tax), including $0.3 million ($0.2 million after tax) during th e three-month period ended March 29, 2026.

The cumulative impact of applying highly inflationary accounting to Turk ey has been a pretax charge to earnings of $9.0 million ($6.9 million after tax), including $(0.2) million ($(0.2) million after tax) during th e six-month period ended June 28, 2026.

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

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

However, the Company believes its exposure is limited to its net investment in Turkey, which was approximat ely $50 million as of March 29, 2026.

However, the Company believes its exposure is limited to its net investment in Turkey, which was approximat ely $45 million as of June 28, 2026.

SONOCO PRODUCTS COMPANY

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

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

At March 29, 2026, t he Company had derivative contracts outstanding to hedge the prices on a portion of anticipated aluminum purchases.

At June 28, 2026, t he Company had derivative contracts outstanding to hedge the prices on a portion of anticipated aluminum purchases.

These contracts, some of which qualify as cash flow hedges, include aluminum swaps totaling 6,129 metric tons.

The fair value of the Company’s commodity cash flow hedges netted to a gain positions of $3.3 million and $1.7 million at March 29, 2026 and December 31, 2025, respectively.

The amount of the gain included in accumulated other comprehensive (loss)/income at March 29, 2026 expected to be reclassified to the income statement during the next twelve months is $3.2 million .

SONOCO PRODUCTS COMPANY

The fair value of the Company’s commodity cash flow hedges netted to gain positions of $1.4 million and $1.7 million at June 28, 2026 and December 31, 2025, respectively.

The amount of the gain included in accumulated other comprehensive (loss)/income at June 28, 2026 expected to be reclassified to the income statement during the next twelve months is $1.3 million .

The Company routinely enters into derivative currency contracts to mitigate the risk of unfavorable fluctuations in the exchange rate on certain anticipated foreign currency cash flows.

T he total market value of these instruments resulted in a net loss po sition of $0.3 million and a net gain position of $49 thousand at March 29, 2026 and December 31, 2025, respectively .

In addition, at March 29, 2026, the Company had various currency contracts outstanding to hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables.

T he total market value of these instruments resulted in a net gain po sition of $1.8 million and $49 thousand at June 28, 2026 and December 31, 2025, respectively .

In addition, at June 28, 2026, the Company had various currency contracts outstanding to hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables.

Although placed as economic hedges, the Company does not apply hedge accounting to these instruments.

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

The fair value of the Company’s non-designated deriva tives position was a loss o f $0.8 million and $1.1 million at March 29, 2026 and December 31, 2025, respectively.

The fair value of the Company’s non-designated deriva tives position was a loss o f $0.6 million and $1.1 million at June 28, 2026 and December 31, 2025, respectively.

In April 2024, the Company entered into cross-currency swap agreements with a total notional amount of $500 million, maturing on May 1, 2027, to effectively convert a portion of the Company’s fixed-rate U.S.

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The gain or loss on the net investment hedge derivative instruments is included in the “Foreign currency translation” component of “Accumulated other comprehensive (loss)/income” until the net investment is sold, diluted, or liquidated.

Net interest receivables for the cross-currency swaps totaling $10.8 million for the three-month period ended March 29, 2026 are excluded from the net investment hedge effectiveness assessment and are recorded in “Interest expense” in the Company’s Condensed Consolidated Statements of Income.

Net interest income on the cross-currency swaps totaling $11.1 million and $22.0 million for the three and six months ended June 28, 2026 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 $157.2 million and $207.2 million at March 29, 2026 and December 31, 2025, respectively.

Foreign currency translati on loss of $117.1 million (net of income taxes of $40.1 million ) and a loss of $154.4 million (net of income taxes of $52.8 million) were reported as components of “Accumulated other comprehensive income/(loss)” withi n “Foreign currency items” at March 29, 2026 and December 31, 2025, respectively.

The fair value of the Company’s net investment hedges was a loss position of $144.7 million and $207.2 million at June 28, 2026 and December 31, 2025, respectively.

Foreign currency translati on loss of $107.8 million (net of income taxes of $36.9 million ) and a loss of $154.4 million (net of income taxes of $52.8 million) were reported as components of “ Accumulated other comprehensive (loss)/income ” withi n “Foreign currency items” at June 28, 2026 and December 31, 2025, respectively.

SONOCO PRODUCTS COMPANY

The Company has an investment in preferred stock of a nonaffiliated private company that is accounted for under the measurement alternative of cost less impairment, adjusted for any qualifying observable price changes.

Observable price changes would consist of Level 2 inputs based on privately negotiated transactions with the nonaffiliated company.

The preferred stock balance of $21.2 million is included in “ Other Assets ” in the Company’s Condensed Consolidated Balance Sheet as of March 29, 2026 .

During the first three months of 2026, the U.S.

dolla r strengthened agai nst most of the functional currencies in which the Company’s foreign investments are held, including the euro, the British pound, the Moroccan dirham, the Polish zloty, and the Danish krone.

The preferred stock balance of $21.2 million is included in “ Other Assets ” in the Company’s Condensed Consolidated Balance Sheet as of June 28, 2026 .

During the first six months of 2026, the U.S.

dolla r strengthened agai nst most of the functional currencies in which the Company’s foreign investments are held, including the euro, the British pound, the Polish zloty, the Danish krone, and the Indonesian rupiah.

During this same period, the U.S.

dollar weakened against the Brazilian real, the Australian dollar, and the Malaysian ringgit.

The impact of these changes, and the changes in the net investment hedge discussed above, resulted in a net translation loss of approximately $61 million being recor d ed in “Accumulated other comprehensive (loss)/income” during the three-month period ended March 29, 2026.

SONOCO PRODUCTS COMPANY

dollar weakened against the Brazilian real, the Mexican peso, and the Colombian peso.

The impact of these changes, and the changes in the net investment hedge discussed above, resulted in a net translation loss of ap proximately $111 million being recor d ed in “Accumulated other comprehensive (loss)/income” during the six-month period ended June 28, 2026.

Restructuring and Impairment

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis