HARTSVILLE, S.C., Feb. 13, 2020-- Sonoco (NYSE: SON), one of the most sustainable, diversified global packaging companies, today reported financial results for its fourth quarter and full year, both ending December 31, 2019.
Fourth-Quarter and Full-Year Highlights
- Fourth-quarter 2019 GAAP earnings per diluted share were
$0.44, compared with $0.77in 2018.
- 2019 fourth-quarter results include net after-tax charges of
$0.31per diluted share, primarily related to asset impairments, restructuring actions, non-operating pension costs and acquisition-related expenses. Prior-year results included net after-tax charges of $0.07per diluted share mostly due to restructuring expenses, acquisition costs and other one-time items which were partially offset by a gain related to the impact of the 2017 U.S. Tax Cuts and Jobs Act.
- Full-year 2019 GAAP earnings per diluted share were
$2.88, compared to $3.10in 2018. Sonoco previously provided fourth-quarter and full-year 2019 GAAP earnings guidance of $0.43 to $0.45and $2.87 to $2.89per diluted share, respectively.
- Base net income attributable to Sonoco (base earnings) for the quarter was
$0.75per diluted share, compared with $0.84in 2018. Full-year 2019 base earnings per diluted share were $3.53, compared to $3.37in 2018. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth-quarter and full-year 2019 base earnings guidance of $0.74 to $0.76and $3.52 to $3.54per diluted share, respectively.
- Fourth-quarter 2019 net sales were
$1.31 billion, down from $1.36 billionin 2018. Full-year 2019 net sales were $5.37 billion, compared to $5.39 billionin 2018.
- Full-year cash flow from operations was
$425.9 millionfor 2019, compared with $589.9 millionin 2018. Free cash flow was $74.3 million, compared with $260.2 millionin 2018. 2019 cash flow results included a voluntary contribution into the Company's U.S. defined benefit pension plan of approximately$165 million, after taxes. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
December 31, 2019, Sonoco purchased Thermoformed Engineered Quality LLC, and Plastique Holdings, LTD, (together TEQ), a global manufacturer of thermoformed packaging serving healthcare, medical device and consumer markets, from ESCO Technologies, Inc.(NYSE: ESE) for $187 millionin cash.
First-Quarter and Full-Year 2020 Guidance
- Base earnings for the first quarter of 2020 are estimated to be in the range of
$0.83 to $0.89per diluted share, compared to $0.85per diluted share in the first quarter of 2019.
- Full-year 2020 base earnings are expected to be
$3.60 to $3.70per diluted share, an adjustment from the Company's previously communicated 2020 guidance of $3.65 to $3.75.
- Full-year 2020 cash flow from operations and free cash flow guidance remain unchanged and are expected to be between
$625 million to $645 millionand $250 million to $270 million, respectively.
Note: First-quarter and full-year 2020 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, asset impairment charges, acquisition-related costs, certain income tax related events and other items. These items could have a significant impact on the Company's future GAAP financial results.
Commenting on the Company’s full-year and fourth-quarter results, Sonoco President and Chief Executive Officer
"While we achieved slightly better than the mid-point of our base earnings guidance in the fourth quarter, our bottom-line results faced a difficult comparison to last year due primarily to a lower effective tax rate and hurricane-related business interruption insurance proceeds. Overall, earnings in the fourth quarter of 2019 benefited from solid productivity improvements and acquisitions, which were more than offset by lower volume/mix, a negative price/cost relationship, the negative impact of foreign exchange and reduced income from equity in affiliates.
"Our Consumer Packaging segment's operating profit improved 6.6 percent as strong earnings in paperboard containers and improved results in flexible packaging were partially offset by weak results in rigid plastics. The segment benefited from a positive price/cost relationship and productivity improvements, which were partially offset by lower volume/mix and higher operating costs. Our Paper and Industrial Converted Products segment experienced a 10.5 percent decline in operating profit over the prior year's quarter as strong improvements in productivity and earnings from the Corenso acquisition were more than offset by a negative price/cost relationship, lower volume/mix and the impact of the prior year's business interruption insurance proceeds."
"Operating profit in our Protective Solutions segment improved as strong temperature-assured packaging volume along with segment-wide productivity improvements were partially offset by weak molded foam and fiber packaging results. Finally, our Display and Packaging segment saw a decline in operating profit in the quarter as continued solid results in international contract packaging and domestic display and packaging activity were more than offset by a decline in retail security volume/mix."