Sonoco Reports First Quarter 2020 Results

Financial News
Provides COVID-19 Update and Withdraws Full-year 2020 Guidance Due to Uncertainty

HARTSVILLE, S.C., April 16, 2020 -- Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today reported financial results for its first quarter ending March 29, 2020, and provided an update related to the impact of the COVID-19 pandemic on the Company.

First Quarter Highlights

  • First-quarter 2020 GAAP earnings per diluted share were $0.80, compared with $0.73 in 2019.
  • First-quarter 2020 GAAP earnings included net after-tax charges of $14.8 million related primarily to restructuring actions and non-operating pension costs. In the first quarter of 2019, GAAP earnings included net after-tax charges of $12.5 million related to restructuring actions and non-operating pension costs.
  • Base net income attributable to Sonoco (base earnings) for first-quarter 2020 was $0.94 per diluted share, compared with $0.85 in 2019. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided first-quarter 2020 base earnings guidance of $0.83 to $0.89 per diluted share.
  • First-quarter 2020 net sales were $1.30 billion, compared with $1.35 billion in 2019.
  • Cash flow from operations was $87.7 million in the first three months of 2020, compared with $92.3 million in 2019. Free cash flow was $13.7 million, compared with $9.5 million in the first three months of 2019. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)

2020 Full-Year Guidance Withdrawn; Second Quarter Guidance Provided

  • Sonoco has withdrawn its full-year 2020 guidance for base earnings, cash flow from operations and free cash flow due to the unknown severity and duration of the COVID-19 pandemic and the related lack of visibility to the impact on the Company's served markets.
  • The Company is providing second-quarter base earnings guidance of $0.73 to $0.83, compared to $0.95 per diluted share in the second quarter of 2019. The Company's wide guidance range reflects uncertainties regarding challenging macroeconomic conditions stemming from the pandemic, including the negative impact of higher recycled fiber costs and a stronger U.S. dollar.

Note: Second-quarter 2020 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:  restructuring costs and restructuring-related impairment charges, acquisition-related costs, possible gains or losses on 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 results.

CEO Comments
Commenting on the Company’s first-quarter performance, Howard Coker, President and Chief Executive Officer, said, "I could not be more proud of the heroic efforts our associates are making every day to meet the critical needs of our customers during a period of unprecedented disruption and uncertainty. By focusing daily on controlling what is vitally important, including the health and safety of our people, the quality of our products, productivity improvements and cost management, Sonoco was able to report strong bottom-line results in the first quarter with GAAP earnings up 9.2 percent from last year and base earnings up 10.6 percent, exceeding the high-end of our base earnings guidance. Although we saw strong results in March across many of our businesses, which we believe was largely attributable to consumers spending more time at home as a result of COVID-19, the pandemic’s impact has clearly started to weigh on certain of our served markets. We expect that weaker demand due to COVID-19 in certain parts of our business, along with unprecedented increases in recycled fiber costs, will have a significant negative impact on our second-quarter results. We have been responding aggressively to this global crisis by implementing new workplace controls to protect our people and by taking actions to improve our liquidity and reduce our operating costs."


Source: Sonoco