Sonoco Reports Fourth Quarter and Full Year 2024 Results

HARTSVILLE, S.C., Feb. 18, 2025 (GLOBE NEWSWIRE) — Sonoco Products Company (“Sonoco” or the “Company”) (NYSE: SON), a global leader in high-value sustainable packaging, today reported financial results for its fourth quarter and fiscal year ended December 31, 2024.

References in today’s news release to consolidated “net sales,” “operating profit,” and “adjusted operating profit,” and Consumer Packaging segment “segment operating profit” and “segment adjusted EBITDA” along with the corresponding year-over-year comparable results, do not include results of the Company’s Thermoformed and Flexibles Packaging business and its global Trident business (collectively, “TFP”), which are being accounted for as discontinued operations.

Summary:

• Expanded global leadership in sustainable metal packaging following the completion of the acquisition of Eviosys, Europe’s leading food cans, ends and closures manufacturer, on December 4, 2024
• Entered into an agreement to sell TFP to TOPPAN Holdings, Inc. for approximately $1.8 billion
• Reported fourth quarter GAAP net loss attributable to Sonoco of $(43) million, adjusted net income attributable to Sonoco of $100 million, diluted earnings per share of $(0.44) and adjusted diluted earnings per share of $1.00
• Excluding the impact of the Eviosys acquisition, adjusted diluted earnings per share for the fourth quarter would have been $1.17, which is comparable to the Company’s previously provided guidance of $1.15 to $1.35
• Generated strong operating cash flow of $834 million and $456 million of Free Cash Flow in 2024
• Produced fourth quarter adjusted EBITDA of $247 million, up 4.6% from the corresponding prior year quarter
• Achieved strong productivity from certain procurement savings, production efficiencies, and fixed cost reduction initiatives of $41 million during the fourth quarter and $183 million for 2024
• Invested a record $378 million of capital in future growth and productivity projects during 2024
• Projecting approximately 20% growth in adjusted net income attributable to Sonoco in 2025

• Fourth quarter net sales of $1.4 billion reflect an increase of 2% compared to the corresponding prior year quarter, driven by low single digit volume gains and partial December sales attributable to Titan Holdings I B.V. (“Eviosys”) following the completion of the acquisition on December 4, 2024, partially offset by the loss of net sales from the divested Protective Solutions (“Protexic”) business, the treatment of recycling operations as a procurement function beginning January 1, 2024 and lower selling prices
• GAAP operating profit for the fourth quarter declined to $56 million due to higher acquisition-related costs and remeasurement loss on Euro denominated cash held by the Company in connection with the Eviosys acquisition; unfavorable price/cost was offset by higher productivity from procurement savings, production efficiencies and fixed cost reduction initiatives
• Effective tax rates on GAAP net income attributable to Sonoco and adjusted net income attributable to Sonoco were 36.6% and 24.8%, respectively, in Q4 2024, compared to 16.3% and 22.9%, respectively, in Q4 2023
• Fourth quarter GAAP net income attributable to Sonoco was $(43) million, resulting in GAAP EPS (diluted) of $(0.44)
• Adjusted operating profit and adjusted EBITDA for the fourth quarter were $127 million and $247 million, respectively
• Fourth quarter adjusted net income attributable to Sonoco was $100 million, resulting in adjusted diluted earnings per share (“adjusted diluted EPS”) of $1.00; excluding the loss from the Eviosys acquisition, adjusted diluted EPS would have been $1.17

“2024 was a milestone year for Sonoco in achieving our strategy to globally scale our metal packaging platform through the acquisition of Eviosys and to transform our portfolio to comprise more sustainable Consumer and Industrial packaging businesses through the announced divestiture of TFP and strategic review of some of our other resin-based diversified businesses,” said Howard Coker, President and Chief Executive Officer. “Our fourth-quarter results were within our expectations as we benefited from strong productivity improvements that more than offset price/cost headwinds that persisted across most of our businesses. Overall, we achieved the second best operating cash flow in our history and maintained solid operating performance due to the focused execution of our global team.”

Fourth Quarter and Year Ended 2024 Segment Results
(Dollars in millions except per share data)

Sonoco reports its financial results in two reportable segments: Consumer Packaging (“Consumer”) and Industrial Paper Packaging (“Industrial”), with all remaining businesses reported as All Other.

• Consumer segment net sales grew 18%, driven by partial December sales attributable to Eviosys after the completion of the acquisition and year-over-year volume growth in rigid paper containers, partially offset by lower selling prices.
• Segment operating profit and segment adjusted EBITDA grew as a result of strong productivity from procurement savings, production efficiencies, and fixed cost reduction initiatives, which offset price/cost headwinds, with volume remaining flat.

• Industrial segment net sales were $571 million as higher volumes and higher selling prices were offset by lower sales related to the treatment of recycling as a procurement function effective January 1, 2024.
• Segment operating profit margin was 12% and adjusted EBITDA margin was 18% as strong productivity efficiencies and modest volume/mix gains were partially offset by continued price/cost pressures.

• Net sales declined 40% reflecting the sale of the Protexic business and lower volumes from the remaining businesses in All Other.
• Operating profit and adjusted EBITDA declined 73% and 65%, respectively, reflecting lower volume/mix in temperature-assured packaging and industrial plastics along with the sale of the Protexic business.

¹Segment and All Other adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. See the Company’s reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures later in this release.
²Net sales for the three and twelve months ended December 31, 2023 include $24 million and $100 million from recycling operations, respectively.
³Excludes results of discontinued operations.

Balance Sheet and Cash Flow Highlights

• Cash and cash equivalents, including from discontinued operations, were $443 million as of December 31, 2024, compared to $152 million as of December 31, 2023, with the increase primarily related to cash acquired in the Eviosys acquisition
• Total debt, including from discontinued operations, was $7.1 billion as of December 31, 2024, an increase of $4.0 billion compared to December 31, 2023, primarily related to the financing for the Eviosys acquisition
• On December 31, 2024, the Company had available liquidity of $1.7 billion, comprising available borrowing capacity under its revolving credit facility and cash on hand
• Cash flow from operating activities for the full year 2024 was $834 million, compared to $883 million in the same period of 2023
• Capital expenditures, net of proceeds from sales of fixed assets, for the full year 2024 were $378 million, compared to $283 million for the same period last year
• Free Cash Flow for the full year 2024 was $456 million compared to $600 million for the same period of 2023. Free Cash Flow is a non-GAAP financial measure. See the Company’s definition of Free Cash Flow, the explanation as to why it is used, and the reconciliation to net cash provided by operating activities later in this release
• Dividends paid during the full year ended December 31, 2024 increased to $203 million compared to $197 million in the prior year

Guidance⁽¹⁾

Full-Year 2025

• Adjusted EPS⁽²⁾: $6.00 to $6.20
• Cash flow from operating activities: $750 million to $850 million
• Adjusted EBITDA⁽²⁾: $1,300 million to $1,400 million

Commenting on the Company’s outlook, Sonoco’s President and CEO, Howard Coker, said, “As we enter the new year, we are focused on successfully integrating Eviosys into Sonoco Metal Packaging and achieving our two-year $100 million synergy target. We have announced the divestiture of TFP and intend to continue pursuing strategic alternatives for our remaining temperature-assured cold-chain packaging business. We intend to use proceeds from divestitures, along with projected strong free cash flow, to lower leverage to 3.0X to 3.3X Net Debt/Adjusted EBITDA by the end of 2026. We will continue to invest in our global Consumer and Industrial packaging businesses while maintaining our focus on profitability and productivity. Finally, we expect to achieve an extraordinary 100 consecutive years of returning cash to our shareholders in the form of dividends. By transforming into a simpler, stronger and more sustainable company, we have positioned Sonoco to grow projected adjusted net income attributable to Sonoco by approximately 20% year over year and adjusted EBITDA by approximately 30% year over year in 2025.”

⁽¹⁾Sonoco’s 2025 guidance includes projected first quarter results from the TFP business. Guidance excludes any impact of other potential divestitures. Although the Company believes the assumptions reflected in the range of guidance are reasonable, given the uncertainty regarding the future performance of the overall economy, the effects of inflation, the challenges in global supply chains, potential changes in raw material prices, other costs, and the Company’s effective tax rate, as well as other risks and uncertainties, including those described below, actual results could vary substantially. Further information can be found in the section entitled “Forward-looking Statements” in this release.

⁽²⁾ Full year 2025 GAAP guidance is not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast without unreasonable efforts: restructuring costs and restructuring-related impairment charges, acquisition/divestiture-related costs, gains or losses from the sale of businesses or other assets, and the income tax effects of these items and/or other income tax-related events. These items could have a significant impact on the Company’s future GAAP financial results. Accordingly, quantitative reconciliations of Adjusted EPS and Adjusted EBITDA guidance and net debt/Adjusted EBITDA targets to the nearest comparable GAAP measures have been omitted in reliance on the exception provided by Item 10 of Regulation S-K.

Effective January 1, 2024, the Company integrated its flexible packaging and thermoformed packaging businesses within the Consumer segment in order to streamline operations, enhance customer service, and better position the business for accelerated growth. As a result, the Company changed its operating and reporting structure to reflect the way it now manages its operations, evaluates performance, and allocates resources. Beginning the first quarter of 2024, the Company’s consumer thermoformed businesses moved from the All Other group of businesses to the Consumer segment. The Company’s Industrial segment was not affected by these changes.

Investor Conference Call Webcast
The Company will host a conference call to discuss the fourth quarter 2024 results. A live audio webcast of the call along with supporting materials will be available on the Sonoco Investor Relations website at https://investor.sonoco.com/. A webcast replay will be available on the Company’s website for at least 30 days following the call.

Contact Information:
Roger Schrum
Interim Head of Investor Relations and Communications
[email protected]
843-339-6018

About Sonoco
Sonoco (NYSE: SON) is a global leader in high-value sustainable packaging that serves some of the world’s best-known brands. Sonoco has approximately 28,000 employees working in more than 300 operations around the world. Guided by our purpose of Better Packaging. Better Life., we strive to foster a culture of innovation, collaboration and excellence to provide solutions that better serve all our stakeholders and support a more sustainable future. Sonoco was proudly named one of America’s Most Responsible Companies by Newsweek. For more information on the Company, visit our website at www.sonoco.com.

Forward-looking Statements
Statements included herein that are not historical in nature, are intended to be, and are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. In addition, the Company and its representatives may from time to time make other oral or written statements that are also “forward-looking statements.” Words such as “achieve,” “anticipate,” “assume,” “believe,” “can,” “consider,” “committed,” “continue,” “could,” “develop,” “estimate,” “expect,” “forecast,” “focused,” “future,” “goal,” “guidance,” “intend,” “is designed to,” “likely,” “maintain,” “may,” “might,” “objective,” “ongoing,” “opportunity,” “outlook,” “persist,” “plan,” “positioned,” “possible,” “potential,” “predict,” “project,” “seek,” “strategy,” “will,” “would,” or the negative thereof, and similar expressions identify forward-looking statements.

Forward-looking statements in this communication include statements regarding, but not limited to: the Company’s future operating and financial performance, including full year 2025 outlook and the anticipated drivers thereof; the use of proceeds from divestitures and free cash flow to reduce leverage and expected future leverage ratios; the Company’s ability to support its customers and manage costs; opportunities for productivity and other operational improvements; price/cost, customer demand and volume outlook; anticipated benefits of the Eviosys acquisition, including with respect to market leadership, strategic alignment, customer relationships, sustainability, innovation and cost synergies; expected benefits from divestitures, including the divestiture of the TFP business, and other potential divestitures, and the timing thereof; the effectiveness of the Company’s strategy and strategic initiatives, including with respect to capital expenditures, portfolio simplification and capital allocation priorities; the effects of the macroeconomic environment and inflation on the Company and its customers; and the Company’s ability to generate continued value and return capital to shareholders.

Such forward-looking statements are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning our future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.

Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements.

Such risks, uncertainties and assumptions include, without limitation, those related to: the Company’s ability to execute on its strategy, including with respect to the integration of the Eviosys operations, divestitures, cost management, productivity improvements, restructuring and capital expenditures, and achieve the benefits it expects therefrom; conditions in the credit markets; the ability to retain key employees and successfully integrate Eviosys; the ability to realize estimated cost savings, synergies or other anticipated benefits of the Eviosys acquisition, or that such benefits may take longer to realize than expected; diversion of management’s attention; the potential impact of the consummation of the Eviosys acquisition on relationships with clients and other third parties; the operation of new manufacturing capabilities; the Company’s ability to achieve anticipated cost and energy savings; the availability, transportation and pricing of raw materials, energy and transportation, including the impact of potential 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 as well as the economic sanctions related thereto, and the ongoing conflicts in the Middle East), and the Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks; the costs of labor; the effects of inflation, fluctuations in consumer demand, volume softness, and other macroeconomic factors on the Company and the industries in which it operates and that it serves; the Company’s ability to meet its environmental, sustainability and similar goals; and to meet other social and governance goals, including challenges in implementation thereof; and the other risks, uncertainties and assumptions discussed in the Company’s filings with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q, particularly under the heading “Risk Factors.” The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur.

References to our Website Address

References to our website address and domain names throughout this release are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission’s rules or the New York Stock Exchange Listing Standards. These references are not intended to, and do not, incorporate the contents of our website by reference into this release.

NON-GAAP FINANCIAL MEASURES

The Company’s results determined in accordance with U.S. generally accepted accounting principles (“GAAP”) are referred to as “as reported” or “GAAP” results. The Company uses certain financial performance measures, both internally and externally, that are not in conformity with GAAP (“non-GAAP financial measures”) to assess and communicate the financial performance of the Company. These non-GAAP financial measures, which are identified using the term “adjusted” (for example, “adjusted operating profit,” “adjusted net income attributable to Sonoco,” and “adjusted diluted EPS”), reflect adjustments to the Company’s GAAP operating results to exclude amounts, including the associated tax effects, relating to:

• restructuring/asset impairment charges¹;
• acquisition, integration and divestiture-related costs;
• gains or losses from the divestiture of businesses and other assets;
• losses from the early extinguishment of debt;
• non-operating pension costs;
• amortization expense on acquisition intangibles;
• changes in last-in, first-out (“LIFO”) inventory reserves;
• certain income tax events and adjustments;
• derivative gains/losses;
• other non-operating income and losses; and
• certain other items, if any.

¹Restructuring and restructuring-related asset impairment charges are a recurring item as the Company’s restructuring programs usually require several years to fully implement, and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity, the inherent imprecision in the estimates used to recognize the impairment of assets, and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.

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

In addition to the “adjusted” results described above, the Company also uses Adjusted EBITDA, Adjusted EBITDA Margin and Net Debt. Adjusted EBITDA is defined as net income excluding the following: interest expense; interest income; provision for income taxes; depreciation, depletion and amortization expense; non-operating pension costs; net income/loss attributable to noncontrolling interests; restructuring/asset impairment charges; changes in LIFO inventory reserves; gains/losses from the divestiture of businesses and other assets; acquisition, integration and divestiture-related costs; other income; derivative gains/losses; and other non-GAAP adjustments, if any, that may arise from time to time. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. Net debt is defined as the total of the Company’s short and long-term debt less cash and cash equivalents.

The Company’s non-GAAP financial measures are not calculated in accordance with, nor are they an alternative for, measures conforming to GAAP, and they may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.

The Company presents these non-GAAP financial measures to provide investors with information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance. The Company consistently applies its non-GAAP financial measures presented herein and uses them for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of management and each business unit against plans/forecasts. In addition, these same non-GAAP financial measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.

Material limitations associated with the use of such measures include that they do not reflect all period costs included in operating expenses and may not be comparable with similarly named financial measures of other companies. Furthermore, the calculations of these non-GAAP financial measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.

To compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in evaluating the Company’s results to review both GAAP information, which includes all of the items impacting financial results, and the related non-GAAP financial measures that exclude certain elements, as described above. Further, Sonoco management does not, nor does it suggest that investors should, consider any non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever reviewing a non-GAAP financial measure, investors are encouraged to review and consider the related reconciliation to understand how it differs from the most directly comparable GAAP measure.

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 for the three-month periods ended December 31, 2024 and 2023.

Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted Earnings Per Share (“EPS”)

Adjusted EBITDA is presented on a total company basis including both continuing operations and discontinued operations. See the Company’s Condensed Consolidated Statements of Income and Condensed Statements of Income for Discontinued Operations on pages 9 and 10 for separate presentation.

The Company does not calculate net income by segment; therefore, adjusted EBITDA by segment is reconciled to the closest GAAP measure of segment profitability, segment operating profit. Segment operating profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with Accounting Standards Codification 280 – “Segment Reporting,” as prescribed by the Financial Accounting Standards Board.

Segment results, which are reviewed by the Company’s management to evaluate segment performance, do not include the following: restructuring/asset impairment charges; amortization of acquisition intangibles; acquisition, integration and divestiture-related costs; changes in LIFO inventory reserves; gains/losses from the sale of businesses or other assets; gains/losses from derivatives; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business. Accordingly, the term “segment operating profit” is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and the All Other group of businesses, except for costs related to discontinued operations.

¹Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of $18,936, the Industrial segment of $6,451, and the All Other group of businesses of $212.
² Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of $2,597, the Industrial segment of $(215), and the All Other group of businesses of $72.
³Included in Corporate are changes in LIFO inventory reserves associated with the Consumer segment of $(6,168) and the Industrial segment of $102.
⁴Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer segment of $9,195 and the Industrial segment of $59.
⁵Included in Corporate are adjustments of previously recognized estimated losses on the divestiture of businesses associated with the Industrial segment of $(4,358) related to the sale of two production facilities in China and the All Other group of businesses of $517 related to the sale of Protexic.
⁶Included in Corporate are net gains from derivatives associated with the Consumer segment of $(577), the Industrial segment of $(2,546), and the All Other group of businesses of $(120).

¹Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of $11,021, the Industrial segment of $7,208, and the All Other group of businesses of $976.
²Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of $1,051, the Industrial segment of $5,793, and the All Other group of businesses of $1,360.
³Included in Corporate are changes in LIFO inventory reserves associated with the Consumer segment of $(1,487) and the Industrial segment of $(144).
⁴Included in Corporate are acquisition, integration and divestiture-related costs associated with the Industrial segment of $415.
⁵Included in Corporate are net gains from derivatives associated with the Consumer segment of $(63), the Industrial segment of $(244), and the All Other group of businesses of $(90).

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 for the full years ended December 31, 2024 and 2023.

Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to Sonoco, and Adjusted Diluted Earnings Per Share (“EPS”)

Adjusted EBITDA represents total Company, including both continuing and discontinued operations. See Condensed Consolidated Statements of Income and Condensed Statements of Income for Discontinued Operations on pages 9 and 10 for separate presentation.

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

¹Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of $52,144, the Industrial segment of $25,619, and the All Other group of businesses of $832.
²Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of $19,259, the Industrial segment of $33,923, and the All Other group of businesses of $1,434.
³Included in Corporate are changes in LIFO inventory reserves associated with the Consumer segment of $(5,780) and the Industrial segment of $(483).
⁴Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer segment of $9,052 and the Industrial segment of $(3,600).
⁵Included in Corporate are net losses on the divestiture of business associated with the Industrial segment of $24,357, including a loss of $25,607 from the sale of two production facilities in China, partially offset by a gain of $(1,250) from the sale of the S3 business, and a gain associated with the All Other group of businesses of $(905) related to the sale of Protexic.
⁶Included in Corporate are net gains from derivatives associated with the Consumer segment of $(1,202), the Industrial segment of $(5,174), and the All Other group of businesses of $(849).

¹Included in Corporate is the amortization of acquisition intangibles associated with the Consumer segment of $44,250, the Industrial segment of $16,121, and the All Other group of businesses of $6,952.
²Included in Corporate are restructuring/asset impairment charges associated with the Consumer segment of $4,111, the Industrial segment of $38,754, and the All Other group of businesses of $2,547.
³Included in Corporate are changes in LIFO inventory reserves associated with the Consumer segment of $(10,915) and the Industrial segment of $(902).
⁴Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer segment of $1,171 and the Industrial segment of $5,810.
⁵Included in Corporate are gains from the sale of the Company’s timberland properties of $(60,945), the sale of its S3 business of $(11,065), and the sales of its BulkSak businesses of $(6,919), all of which are associated with the Industrial segment.
⁶Included in Corporate are net gains from derivatives associated with the Consumer segment of $(257), the Industrial segment of $(1,290), and the All Other group of businesses of $(365).
⁷Included in Corporate are other non-GAAP adjustments associated with the Industrial segment of $3,762 and the All Other group of businesses of $3,249.

Free Cash Flow

The Company uses the non-GAAP financial measure of “Free Cash Flow,” which it defines as cash flow from operations minus net capital expenditures. Net capital expenditures are defined as capital expenditures minus proceeds from the disposition of capital assets. Free Cash Flow may not represent the amount of cash flow available for general discretionary use because it excludes non-discretionary expenditures, such as mandatory debt repayments and required settlements of recorded and/or contingent liabilities not reflected in cash flow from operations.