Sonoco Issues 2018 Financial Guidance and Targets Strategic Priorities
2018 Base EPS Estimated at
Company Outlines 20/20 Vision Targets
Company Reaffirms 2017 Base EPS Guidance
Sonoco expects fourth quarter and full-year 2017 GAAP earnings to be
(Reconciliations of non-GAAP financial measures to GAAP financial measures are available on our website, www.sonoco.com. Base earnings and base earnings per diluted share are non-GAAP financial measures adjusted to remove restructuring charges, asset impairment charges, gains/losses on disposition of assets, acquisition and divestiture expenses and other items, if any, the exclusion of which the Company believes improves comparability and analysis of the underlying financial performance of the business.)
Commenting on the Company’s 2017 expectations, Sanders said, “Following record performance in 2016, we are again expecting to achieve record base earnings in 2017, and based on a solid start to the fourth quarter we remain comfortable with achieving our base EPS guidance of
Company Targets 10 Percent Growth to 2018 Base EPS
Sonoco estimates 2018 base earnings per diluted share to be in the range of
According to
Saunders noted Sonoco expects 2018 net sales to be approximately
Cash Flow, Free Cash Flow Forecasts Project Strong Improvement in 2018
Sonoco is projecting to generate approximately
For 2018, Sonoco is projecting cash from operations to be approximately
(Free cash flow is a non-GAAP financial measure which 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. Free cash flow is defined as cash flow from operations minus net capital expenditures and cash dividends. Net capital expenditures is defined as capital expenditures minus proceeds from, and/or plus costs incurred in, the disposition of capital assets.)
CFO Saunders added the Company’s 2018 capital deployment strategy is expected to be weighted toward investments to grow its existing businesses, including significant investment to the Company’s domestic paper mill system as well as organic growth initiatives, particularly in thermoformed containers. “We also expect to pursue accretive acquisitions in our targeted growth areas and continue our 93-year tradition of returning substantial amounts of cash to shareholders in the form of dividends and share repurchases, including more than
Commenting on the Company’s 2018 forecast, CEO Sanders said, “We are optimistic about 2018 and projecting nearly a 10 percent improvement in base earnings in addition to our strongest generation of cash from operations and free cash flow in five years. This would be the fifth consecutive year of record base earnings, which we believe illustrates the consistency built into our business model.”
20/20 Vision Targets Top-line and Bottom-line Improvement
In discussing the Company’s longer-term outlook, CEO Sanders said Sonoco is targeting to grow top-line sales to greater than
“We expect to achieve our top-line target by producing greater-than-industry-average organic growth and by making accretive acquisitions adding approximately
“To improve base EBITDA margin to 16 percent, we are focused on: further portfolio optimization to ensure we are in the right businesses; operating excellence, where our Sonoco Performance System is beginning to deliver productivity results; commercial excellence, where we are working to capture value through focused price management; holistic business optimization, which are strategies focused on serving the right customers with the right cost structure; and finally, optimizing our structure and better utilizing technology to drive down the cost of back office operations,” Sanders concluded.
Targeted Growth to the Perimeter of the Store
Sonoco’s Consumer Packaging portfolio is expanding offerings to gain a leadership position serving the perimeter of the supermarket, which is growing due to an increase in demand for fresh food products, according to
“Our acquisition of Peninsula Packaging earlier this year opens up white space for us on the perimeter and establishes us as a market leader in fresh produce packaging. We see real opportunity to bring additional packaging technology to fresh produce, especially when it helps extend freshness and shelf life,” Tiede said. “The next step in moving to the perimeter of the store was our acquisition of Clear Lam this summer. In addition to adding modified atmosphere packaging capabilities to our portfolio, which opens up new markets such as meats and cheeses, Clear Lam also serves the dairy market, and they have a strong product line in produce and food service packaging, especially in the area of portion control.”
In addition to growth from the Peninsula acquisition, Tiede announced Sonoco is expanding its thermoforming operations by investing approximately
Tiede added Sonoco’s TruVue® clear plastic can is continuing to expand into new products with new customers. Pacific Coast Producers of
Finally, Sonoco announced it expects to grow composite can production capability into emerging markets to serve snack food customers, including expansion over the next few years into
Telephonic Replay
A telephonic replay of the 2017 analyst meeting will be available starting at
About Sonoco
Founded in 1899,
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 “estimate,” “project,” “intend,” “expect,” “believe,” “consider,” “plan,” “strategy,” “opportunity,” “commitment,” “target,” “anticipate,” “objective,” “goal,” “guidance,” “outlook,” “forecast,” “future,” “re-envision, ” “assume,” “will,” “would,” “can,” “could,” “may,” “might,” “aspires,” “potential,” or the negative thereof, and similar expressions identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements regarding: availability and supply of raw materials, and offsetting high raw material costs; improved productivity and cost containment; improving margins and leveraging strong cash flow and financial position, including the impact of potential changes in tariffs; effects of acquisitions and dispositions; realization of synergies resulting from acquisitions; costs, timing and effects of restructuring activities; adequacy and anticipated amounts and uses of cash flows; expected amounts of capital spending; refinancing and repayment of debt; financial strategies and the results expected of them; financial results for future periods; producing improvements in earnings; profitable sales growth and rates of growth; market leadership; research and development spending; extent of, and adequacy of provisions for, environmental liabilities; adequacy of income tax provisions, realization of deferred tax assets, outcomes of uncertain tax issues and tax rates; goodwill impairment charges and fair values of reporting units; future asset impairment charges and fair values of assets; anticipated contributions to pension and postretirement benefit plans, fair values of plan assets, long-term rates of return on plan assets, and projected benefit obligations and payments; creation of long-term value and returns for shareholders; continued payment of dividends; and planned stock repurchases.
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. The risks, uncertainties and assumptions include, without limitation:
- availability and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs 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;
- costs of labor;
- work stoppages due to labor disputes;
- success of new product development, introduction and sales;
- consumer demand for products and changing consumer preferences;
- ability to be the low-cost global leader in customer-preferred packaging solutions within targeted segments;
- competitive pressures, including new product development, industry overcapacity, and changes in competitors’ pricing for products;
- ability to maintain or increase productivity levels, contain or reduce costs, and maintain positive price/cost relationships;
- ability to negotiate or retain contracts with customers, including in segments with concentration of sales volume;
- ability to improve margins and leverage cash flows and financial position;
- continued strength of our paperboard-based tubes and cores and composite can operations;
- ability to manage the mix of business to take advantage of growing markets while reducing cyclical effects of some of the Company’s existing businesses on operating results;
- ability to maintain innovative technological market leadership and a reputation for quality;
- ability to profitably maintain and grow existing domestic and international business and market share;
- ability to expand geographically and win profitable new business;
- ability to identify and successfully close suitable acquisitions at the levels needed to meet growth targets, and successfully integrate newly acquired businesses into the Company’s operations;
- the costs, timing and results of restructuring activities;
- availability of credit to us, our customers and suppliers in needed amounts and on reasonable terms;
- effects of our indebtedness on our cash flow and business activities;
- fluctuations in obligations and earnings of pension and postretirement benefit plans;
- accuracy of assumptions underlying projections of benefit plan obligations and payments, valuation of plan assets, and projections of long-term rates of return;
- cost of employee and retiree medical, health and life insurance benefits;
- resolution of income tax contingencies;
- foreign currency exchange rate fluctuations, interest rate and commodity price risk and the effectiveness of related hedges;
- changes in U.S. and foreign tax rates, and tax laws, regulations and interpretations thereof;
- accuracy in valuation of deferred tax assets;
- accuracy of assumptions underlying projections related to goodwill impairment testing, and accuracy of management’s assessment of goodwill impairment;
- accuracy of assumptions underlying fair value measurements, accuracy of management’s assessments of fair value and fluctuations in fair value;
- liability for and anticipated costs of environmental remediation actions;
- effects of environmental laws and regulations;
- operational disruptions at our major facilities;
- failure or disruptions in our information technologies;
- loss of consumer or investor confidence;
- ability to protect our intellectual property rights;
- actions of domestic or foreign government agencies and changes in laws and regulations affecting the Company;
- international, national and local economic and market conditions and levels of unemployment; and
- economic disruptions resulting from terrorist activities and natural disasters.
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.
Additional information concerning some of the factors that could cause materially different results is included in the Company’s reports on forms 10-K, 10-Q and 8-K filed with the
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.
Contact:Roger Schrum +843/339-6018 roger.schrum@sonoco.com
Source: Sonoco Products Company