Sonoco swings to $732 million quarterly loss on $829 million goodwill impairment

Sonoco Products Company (SON) posted a third-quarter net loss of $732 million, or $7.36 per diluted share, the company said Wednesday in an earnings release attached to a regulatory filing.

The loss included an $829 million goodwill impairment charge. A year earlier, the company reported net income of $123 million, or $1.23 per diluted share, for the quarter ended Sept. 28, 2025.

Here's how the company did:

• Net sales: $2.04 billion vs. $2.13 billion a year earlier
• Diluted EPS, GAAP: loss of $7.36 vs. income of $1.23 a year earlier
• Adjusted diluted EPS: $1.67 vs. $1.92 a year earlier
• Adjusted EBITDA: $352 million vs. $386 million a year earlier

Net sales fell 4.2% from a year earlier, driven mainly by the November 2025 divestiture of the ThermoSafe business. Excluding divestitures, net sales were essentially flat. Higher selling prices, implemented to offset inflation and tariffs, partly offset lower volume and mix. Adjusted operating profit was $268 million, down 13.1% from $308 million.

Revised 2026 guidance

The company revised its full-year 2026 guidance. It now expects net sales of $7.20 billion to $7.40 billion and adjusted diluted EPS of $5.30 to $5.50.

It also expects adjusted EBITDA of $1.20 billion to $1.25 billion and operating cash flow of $600 million to $650 million. The cash flow range includes payments of prior-year taxes on divestiture gains and restructuring costs.

The company did not give full-year GAAP guidance. It said the timing and size of restructuring, acquisition and divestiture items, and related tax effects, could not be reliably forecast.

Chief Financial Officer Paul Joachimczyk said the company expects continued strong performance from the Industrial segment in the fourth quarter, supported by North American URB demand. He also expects more stable performance from the Consumer segment.

President and Chief Executive Officer Howard Coker said: "While our third-quarter performance fell short of our expectations, we are taking targeted actions through our Profitability Performance Plan to further reduce costs, improve productivity and address the impact of inflationary pressures."

Segment results

Consumer Packaging net sales were $1.40 billion, down 2.9% from $1.44 billion a year earlier. The company said adverse weather hurt seasonal vegetable harvests in EMEA and the Americas, reducing metal can volumes.

Consumer segment operating profit was $179 million, down 14.6% from $209 million. Productivity savings and cost containment were more than offset by inflation-driven price and cost headwinds and lower volume and mix. International paper can operations grew volume by double digits year over year, the company said, driven by snack demand in emerging markets.

Industrial Paper Packaging net sales rose 5.2% to $646 million from $614 million, primarily due to pricing actions implemented to offset rising costs. North American URB trade ton sales increased 10% year over year, and mill utilization was 94%.

Industrial segment operating profit fell 6.2% to $88 million. Operating margin was 13.6%, compared with 15.3% a year earlier, as rising raw material, freight and energy costs outweighed pricing and productivity gains.

Restructuring and asset impairment charges totaled $856 million in the quarter, including the $829 million goodwill impairment. The company said the impairment is non-cash. The adjusted effective tax rate was 24.6%, compared with 22.9% a year earlier. The filing does not give a headcount figure for the restructuring actions.

Cash flow and debt

Operating cash flow was $285 million in the quarter. Year to date it was $218 million, compared with $277 million a year earlier, after about $103 million of one-time tax payments on gains from the 2025 divestitures.

Free cash flow for the first nine months was $43 million, compared with $29 million a year earlier. Cash and cash equivalents were $183 million, down from $378 million at Dec. 31, 2025.

On Sept. 25, 2026, the company amended a credit agreement to add $800 million in new term loan facilities. It drew $500 million to refinance an existing term loan due in 2028 and kept $300 million of delayed-draw capacity, usable within 12 months.

Chief Financial Officer Paul Joachimczyk said: "The refinancing extends our maturity profile and enhances our financial flexibility, positioning us well to continue executing our capital allocation priorities while maintaining our investment grade credit ratings."

Total debt was $4.3 billion and net debt was $4.1 billion at Sept. 27, 2026. The company reduced total debt by $162 million and net debt by $176 million during the quarter, and it had $1.3 billion of liquidity, including $1.1 billion of revolving credit availability.

Dividends per common share were $0.54 in the quarter, up from $0.53 a year earlier.

The company will host a conference call Thursday at 8 a.m. Eastern Time to discuss the quarter, with prepared remarks and a question-and-answer session.