HARTSVILLE, S.C., July 18, 2019-- Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today reported financial results for its second quarter ending June 30, 2019.
Second Quarter Highlights
- Second-quarter 2019 GAAP earnings per diluted share were
$0.80, compared with $0.88in 2018.
- Second-quarter 2019 GAAP earnings included after-tax charges of
$15.3 millionrelated to restructuring actions, non-operating pension costs and acquisition costs. In the second quarter of 2018, GAAP results included net after-tax charges of $4.2 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 second quarter 2019 was
$0.95per diluted share, compared with $0.93in 2018. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided second-quarter 2019 base earnings guidance of $0.93 to $0.99per diluted share.
- Second-quarter 2019 net sales were
$1.36 billion, essentially flat when compared with $1.37 billionfrom 2018.
- Cash flow from operations shows
$40.1 millionin the first six months of 2019, compared with $251.2 millionin 2018. Free cash flow was a use of cash of $144.9 million, compared with $88.8 millionof free cash flow generated in the first six months of 2018. Year-to-date cash flows reflect a $190 millionvoluntary contribution to the Company's U.S. defined benefit pension plans. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
May 20, 2019, Sonoco signed a definitive agreement to acquire Corenso Holdings America, Inc, from a company owned by investment funds advised by Madison Dearborn Partners, LLC, for approximately $110 millionin cash. Corenso Holdings America is a leading U.S. manufacturer of uncoated recycled paperboard and high-performance cores used in the paper, packaging films, tape and specialty industries. The acquisition is expected to close by the end of the third quarter of 2019.
Third Quarter and Full-Year Guidance Update
- Base earnings for the third quarter of 2019 are estimated to be in the range of
$0.88 to $0.94per diluted share, compared to $0.86per diluted share in the third quarter of 2018.
- Full-year 2019 base earnings guidance remains at
$3.52 to $3.62per diluted share.
- As a result of the after-tax cash flow impact from the voluntary contribution to the Company's U.S. defined benefit pension plans, full-year 2019 operating cash flow guidance has been lowered to a range of
$435 million to $455 million, down from the previous range of $600 million to $620 million. Also, the Company now expects free cash flow to be $60 million to $80 million, compared with previous guidance of $225 million to $245 million.
Note: Third-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 Second Quarter Results
Commenting on the Company’s second-quarter GAAP and base earnings performance,
“Our Consumer Packaging segment reported lower sales and operating profit compared to last year's quarter, however, operating margin improved slightly to 10.4 percent. Sales in our Paper and Industrial Converted Products segment were up 3.6 percent, while operating profit was essentially flat with last year's record results and operating margin declined 52 basis points. Also, our Display and Packaging segment continued its turnaround with operating margin expanding 477 basis points over the prior-year period, and in our Protective Solutions segment operating profit improved 4.8 percent and operating margin expanded by 66 basis points.”