Sonoco Reports First Quarter 2019 Results

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Solid Performance Drives Full-year Base Earnings Guidance Raise

HARTSVILLE, S.C., April 18, 2019 (GLOBE NEWSWIRE) -- Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today reported financial results for its first quarter ending March 31, 2019.

First Quarter Highlights

  • First-quarter 2019 GAAP earnings per diluted share were $0.73, compared with $0.73 in 2018.
  • First-quarter 2019 GAAP earnings included after-tax charges of $12.5 million related to restructuring actions as well as non-operating pension costs. In the first quarter of 2018, GAAP results included net after-tax charges of $0.4 million, as after-tax restructuring charges were mostly offset by a tax benefit from the U. S. Tax Cuts and Jobs Acts of 2017.
  • Base net income attributable to Sonoco (base earnings) for first quarter 2019 was $0.85 per diluted share, compared with $0.74 in 2018. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided first-quarter 2019 base earnings guidance of $0.77 to $0.83 per diluted share.
  • First-quarter 2019 net sales were $1.35 billion, up 3.6 percent from $1.30 billion in 2018.
  • Cash flow from operations was $92.3 million in the first three months of 2019, compared with $119.8 million in 2018. Free cash flow was $9.5 million, compared with $44.9 million in the first quarter of 2018. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)

Second Quarter and Full-Year Guidance Update

  • Base earnings for the second quarter of 2019 are estimated to be in the range of $.93 to $.99 per diluted share, compared to $.93 per diluted share in the second quarter of 2018.
  • Full-year 2019 base earnings guidance is raised to $3.52 to $3.62 per diluted share, reflecting the better-than-expected first-quarter results. The Company previously issued full-year guidance of $3.47 to $3.57. As previously announced, beginning in 2019, the Company excludes all non-operating components of net pension expense from base earnings. In 2019, these charges are expected to total approximately $20.0 million compared to $0.2 million that were previously classified as base charges in 2018.
  • Full-year 2019 operating cash flow and free cash flow guidance is unchanged at a range of $600 million to $620 million and $225 million to $245 million, respectively.

Note: Second-quarter and full-year 2019 GAAP guidance are 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: possible gains or losses on the sale of businesses or other assets, restructuring costs and restructuring-related impairment charges, acquisition-related costs, 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.

CEO Comments on First Quarter Results
Commenting on the Company’s first-quarter GAAP and base performance, Rob Tiede, President and Chief Executive Officer, said, "Sonoco produced solid first-quarter results, which exceeded the high end of our earnings guidance, as our diverse mix of businesses successfully navigated through what can best be described as sluggish global economic conditions. Net sales grew by 3.6 percent, while GAAP net income attributable to Sonoco was essentially flat, both compared to last year's first quarter. Base net income gained 15.8 percent over the prior-year period as a result of earnings from acquisitions, a positive price/cost relationship, improvements in productivity, and a lower effective tax rate, which were only partially offset by modestly lower volume/mix, and the negative impact from foreign exchange translation. GAAP gross profit margin improved by 70 basis points and GAAP operating profit increased 6.2 percent over the prior year's quarter, while base operating profit increased 13.0 percent.

“We were extremely pleased that each of our business segments recorded year-over-year improvement in operating earnings during the first quarter. Our Consumer Packaging segment reported slightly improved operating results in the first quarter, while operating margin declined 19 basis points compared to last year’s period. However, these results were significantly better than the disappointing 2018 fourth-quarter results, as sequentially margins improved by 291 basis points. Our Paper and Industrial Converted Products segment continued to drive strong results, with operating margin improving 112 basis points compared to last year’s first quarter. In addition, the turnaround in our Display and Packaging segment continued, with operating margin expanding 348 basis points over the prior year period, and our Protective Solutions business operating results improved slightly and operating margin expanded by 45 basis points.”

Link to press release

Source: Sonoco