Sonoco Reports Strong First Quarter 2018 Results
Top-line and Bottom-line Results Achieve Double-Digit Improvement
Company Raises Full-Year Guidance
First Quarter Highlights
- First-quarter 2018 GAAP earnings per diluted share were
$0.73 , compared with$0.53 in 2017. - First-quarter 2018 GAAP earnings included after-tax charges of
$0.01 per diluted share related to restructuring and acquisition-related expenses, which were mostly offset by the effect of the change in the U.S. corporate tax rate on adjustments to deferred taxes. In the first quarter of 2017, GAAP results included$0.06 per diluted share, after tax, in restructuring and acquisition-related charges. - Base net income attributable to Sonoco (base earnings) for first quarter 2018 was
$0.74 per diluted share, compared with$0.59 in 2017. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided first-quarter 2018 base earnings guidance of$0.69 to $0.75 per diluted share. - First-quarter 2018 net sales were
$1.30 billion , up 11.2 percent, from$1.17 billion in 2017. - Cash flow from operations was
$119.8 million in the first quarter of 2018, compared with$67.4 million in 2017. Free cash flow for the first quarter was$44.9 million , compared with$(18.4) million in 2017. (See free cash flow definition and reconciliation to cash flow from operations later in this release.) - On
April 12, 2018 , Sonoco completed the acquisition of Highland Packaging Solutions, aPlant City, Fla. -based, leading manufacturer of thermoformed packaging for fresh fruits, vegetables and eggs for approximately$150 million in cash.
Second Quarter and Full-Year Guidance Update
- Base earnings for the second quarter of 2018 are estimated to be in the range of
$0.83 to $0.89 per diluted share, compared to$0.71 per diluted share in the second quarter of 2017. - Full-year 2018 base earnings guidance has been raised to
$3.22 to $3.32 per diluted share, from the previous guidance of$3.16 to $3.26 per diluted share, to reflect a downward revision in the expected effective tax rate to approximately 26 percent and expected earnings accretion from the Highland Packaging acquisition. - Full-year 2018 operating cash flow and free cash flow guidance remain in the range of
$560 million to $580 million and$180 million and$200 million , respectively.
Note: Second-quarter and full-year 2018 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
Commenting on the Company’s first-quarter GAAP and base results, Sonoco President and Chief Executive Officer
“Net sales in our Consumer Packaging segment grew 18.2 percent over the prior year, while operating profit improved by approximately 2.7 percent. Improved productivity, a positive price/cost relationship and the benefit of acquisitions drove the first quarter operating profit increase and more than offset higher operating inflation and lower volume/mix.
“Our Paper and Industrial Converted Products segment reported its strongest first-quarter operating profit in 10 years, improving 48.2 percent from last year, while net sales grew 4.1 percent. The improvement in segment operating profit was primarily driven by a positive price/cost relationship, which more than offset higher operating costs and lower volume/mix which was driven by the current period having one less day than the prior period.
“Operating profit from our Protective Solutions segment was down slightly from last year as productivity improvements helped offset lower volume/mix, primarily in the segment’s automotive components business. Display and Packaging segment operating profit was lower than last year due to higher operating costs and a negative mix of business associated with the segment’s domestic pack center and display businesses. However, both of these segments registered sequential quarterly improvement as efforts to address the current challenges in these businesses are beginning to show positive results.”
First Quarter Review
Net sales for the first quarter were
GAAP net income attributable to Sonoco in the first quarter was
First-quarter GAAP earnings included after-tax charges of
Gross profits were a record
First-quarter selling, general and administrative expenses increased
Segment Review
Sonoco reports its financial results in four operating segments: Consumer Packaging, Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions. Segment operating results do not include restructuring and asset impairment charges, acquisition expenses, interest income and expense, income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis.
Consumer Packaging
Sonoco’s Consumer Packaging segment includes the following products and services: round and shaped rigid containers and trays (both composite and thermoformed plastic); extruded and injection-molded plastic products; printed flexible packaging; global brand artwork management; and metal and peelable membrane ends and closures.
First-quarter 2018 sales for the segment were
Segment sales increased 18.2 percent compared to the prior-year quarter due to sales added from acquisitions, the positive translation impact of changes in foreign exchange rates, and higher selling prices. Segment operating profit grew 2.7 percent compared to the prior-year quarter due to productivity improvements, a positive price/cost relationship and the benefit of acquisitions, partially offset by a negative change in volume/mix, higher wages and operating costs. Higher sales volume/positive sales mix in global plastics and international composite can operations were more than offset by lower composite can volume in
Display and Packaging
The Display and Packaging segment includes the following products and services: designing, manufacturing, assembling, packing and distributing temporary, semi-permanent and permanent point-of-purchase displays; supply chain management services, including contract packing, fulfillment and scalable service centers; retail packaging, including printed backer cards, thermoformed blisters and heat sealing equipment; and paper amenities, such as coasters and glass covers.
First-quarter 2018 sales for this segment were
Sales increased 24.4 percent compared to last year’s quarter due primarily to volume growth from a new pack center near
Paper and Industrial Converted Products
The Paper and Industrial Converted Products segment includes the following products: paperboard tubes and cores; fiber-based construction tubes; wooden, metal and composite wire and cable reels and spools; and recycled paperboard, linerboard, corrugating medium, recovered paper and material recycling services.
First-quarter 2018 sales for the segment were
Segment sales grew 4.1 percent from the prior-year quarter due to the positive impact of foreign exchange and higher selling prices implemented to recover higher freight and other operating costs, partially offset by lower volume/mix. Volume/mix gains in wire and cable reels as well as
Protective Solutions
The Protective Solutions segment includes the following products: custom-engineered, paperboard-based and expanded foam protective packaging and components; and temperature-assured packaging.
First-quarter 2018 sales were
This segment’s sales declined slightly year over year as the positive impact of foreign exchange and higher selling prices was offset by lower volume/mix, primarily in the segment’s automotive components business. While first-quarter segment operating profit was flat compared to the 2017 quarter, it improved sequentially as the segment is focused on reducing fixed costs in response to lower automotive component volume. Segment operating margin was 8.2 percent, essentially flat with the prior-year quarter.
Corporate/Tax
Net interest expense for the first quarter of 2018 increased to
Note: In regards to the effect of the Tax Act, Sonoco has not yet been able to fully complete its accounting. For certain of the Tax Act's provisions, the Company has made reasonable estimates and has included any measurement period adjustments in its first quarter earnings accordingly. In other cases, the Company has not been able to make a reasonable estimate due either to complexity or uncertainty and, as such, continues to account for those items consistent with their pre-Tax Act accounting. The Company believes any adjustments remaining to be made upon the completion of its accounting will not have a material impact on the Company's financial position.
Cash Flow and Free Cash Flow
For the first quarter of 2018, cash generated from operations was
Free cash flow for first 2018 quarter was
As of
Second Quarter and Full-Year 2018 Outlook
Sonoco expects second-quarter 2018 base earnings to be in the range of
Full-year 2018 base earnings per diluted share are expected to be in a range of
Operating and free cash flow guidance remains unchanged for 2018 and is expected to be in the range of
Although the Company believes the assumptions reflected in the range of guidance are reasonable, given uncertainty regarding the future performance of the overall economy and potential changes in raw material prices and other costs, potential changes in the estimated impact of the Tax Act on the Company's effective tax rate, as well as other risks and uncertainties, including those described further below, actual results could vary substantially.
Commenting on the Company’s outlook, Tiede said, “We’re off to a good start to 2018 as our two largest segments, Consumer Packaging and Paper/Industrial Converted Products, showed solid improvement in the first quarter and we’re beginning to gain traction in improving the performance of our Protective Solutions and Display and Packaging segments."
“Overall, we’re projecting a strong second quarter for Sonoco as our Consumer Packaging segment will benefit from the recently completed acquisition of Highland Packaging Solutions, which further complements our growing thermoformed plastic packaging strategy serving fresh fruits, vegetables and dairy products found in the fast-growing perimeter of the supermarket. We also expect strong second-quarter performance from our Paper/Industrial Converted Products segment as we believe demand should be good and expect to continue to benefit from a favorable price/cost relationship. As a result, along with our expectations for a lower effective tax rate, we have raised full-year 2018 base earnings guidance by
“But we still have work to do to meet our growth and margin improvement targets in 2018. Inflationary cost pressures in freight, labor, energy and material costs, particularly resins, are requiring us to drive recovery through price increases in many of our businesses. Furthermore, we must work to find effective solutions for our packaged food customers to help them reverse recent headwinds as consumers focus on fresh food alternatives and expanding e-commerce options. Finally, we must continue to drive a turnaround of our Display and Packaging and Protective Solutions segments. We remain confident that our blend of paper, polymer and protective packaging businesses will continue to produce consistent earnings, improved returns and greater rewards for our shareholders.”
Conference Call Webcast
Management will host a conference call and webcast to further discuss these results beginning at
About Sonoco
Founded in 1899, Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging, and displays and packaging supply chain services. With annualized net sales of approximately
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; 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, 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||
(Dollars and shares in thousands except per share) | ||||||||||
Three Months Ended | ||||||||||
April 1, 2018 | April 2, 2017 | |||||||||
Net sales | $ | 1,304,187 | $ | 1,172,324 | ||||||
Cost of sales | 1,053,585 | 949,345 | ||||||||
Gross profit | 250,602 | 222,979 | ||||||||
Selling, general and administrative expenses | 137,441 | 125,209 | ||||||||
Restructuring/Asset impairment charges | 3,063 | 4,111 | ||||||||
Operating profit | $ | 110,098 | $ | 93,659 | ||||||
Non-operating pension (income)/cost | (291 | ) | 3,686 | |||||||
Net interest expense | 13,355 | 12,058 | ||||||||
Income before income taxes | 97,034 | 77,915 | ||||||||
Provision for income taxes | 23,356 | 25,539 | ||||||||
Income before equity in earnings of affiliates | 73,678 | 52,376 | ||||||||
Equity in earnings of affiliates, net of tax | 1,247 | 1,954 | ||||||||
Net income | 74,925 | 54,330 | ||||||||
Net income attributable to noncontrolling interests | (870 | ) | (597 | ) | ||||||
Net income attributable to Sonoco | $ | 74,055 | $ | 53,733 | ||||||
Weighted average common shares outstanding – diluted | 100,896 | 100,980 | ||||||||
Diluted earnings per common share | $ | 0.73 | $ | 0.53 | ||||||
Dividends per common share | $ | 0.39 | $ | 0.37 |
FINANCIAL SEGMENT INFORMATION (Unaudited) | |||||||||
(Dollars in thousands) | |||||||||
Three Months Ended | |||||||||
April 1, 2018 | April 2, 2017 | ||||||||
Net sales | |||||||||
Consumer Packaging | $ | 569,852 | $ | 482,181 | |||||
Display and Packaging | 142,658 | 114,635 | |||||||
Paper and Industrial Converted Products | 460,653 | 442,502 | |||||||
Protective Solutions | 131,024 | 133,006 | |||||||
Consolidated | $ | 1,304,187 | $ | 1,172,324 | |||||
Operating profit: | |||||||||
Segment operating profit: | |||||||||
Consumer Packaging | $ | 61,088 | $ | 59,460 | |||||
Display and Packaging | 1,732 | 3,222 | |||||||
Paper and Industrial Converted Products | 39,781 | 26,850 | |||||||
Protective Solutions | 10,680 | 10,931 | |||||||
Restructuring/Asset impairment charges | (3,063 | ) | (4,111 | ) | |||||
Other, net | (120 | ) | (2,693 | ) | |||||
Consolidated | $ | 110,098 | $ | 93,659 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) | |||||||||
(Dollars in thousands) | |||||||||
Three Months Ended | |||||||||
April 1, 2018 | April 2, 2017 | ||||||||
Net income | $ | 74,925 | $ | 54,330 | |||||
Asset impairment charges/losses on disposition of assets | (65 | ) | 291 | ||||||
Depreciation, depletion and amortization | 58,068 | 49,008 | |||||||
Net pension and postretirement plan expenses/(contributions) | (10,232 | ) | (31,204 | ) | |||||
Changes in working capital | (26,893 | ) | (5,070 | ) | |||||
Changes in tax accounts | 15,514 | 10,746 | |||||||
Other operating activity | 8,448 | (10,703 | ) | ||||||
Net cash provided by operating activities | 119,765 | 67,398 | |||||||
Purchase of property, plant and equipment, net | (36,008 | ) | (48,974 | ) | |||||
Cost of acquisitions, net of cash acquired | — | (221,417 | ) | ||||||
Net debt proceeds/(repayments) | 11,826 | 193,660 | |||||||
Cash dividends | (38,829 | ) | (36,840 | ) | |||||
Other, including effects of exchange rates on cash | (6,416 | ) | 1,737 | ||||||
Net decrease in cash and cash equivalents | 50,338 | (44,436 | ) | ||||||
Cash and cash equivalents at beginning of period | $ | 254,912 | $ | 257,226 | |||||
Cash and cash equivalents at end of period | $ | 305,250 | $ | 212,790 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||
(Dollars in thousands) | |||||||||
April 1, 2018 | December 31, 2017 | ||||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 305,250 | $ | 254,912 | |||||
Trade accounts receivable, net of allowances | 756,102 | 725,251 | |||||||
Other receivables | 91,319 | 64,561 | |||||||
Inventories | 460,727 | 474,063 | |||||||
Prepaid expenses and deferred income taxes | 50,638 | 44,849 | |||||||
1,664,036 | 1,563,636 | ||||||||
Property, plant and equipment, net | 1,164,968 | 1,169,377 | |||||||
Goodwill | 1,252,877 | 1,241,875 | |||||||
Other intangible assets, net | 321,768 | 331,295 | |||||||
Other assets | 249,420 | 251,538 | |||||||
$ | 4,653,069 | $ | 4,557,721 | ||||||
Liabilities and Shareholders’ Equity | |||||||||
Current Liabilities: | |||||||||
Payable to suppliers and other payables | $ | 833,626 | $ | 831,664 | |||||
Notes payable and current portion of long-term debt | 175,530 | 159,327 | |||||||
Income taxes payable | 26,218 | 8,979 | |||||||
1,035,374 | 999,970 | ||||||||
Long-term debt, net of current portion | 1,289,045 | 1,288,002 | |||||||
Pension and other postretirement benefits | 349,819 | 355,187 | |||||||
Deferred income taxes and other | 182,375 | 184,502 | |||||||
Total equity | 1,796,456 | 1,730,060 | |||||||
$ | 4,653,069 | $ | 4,557,721 |
Definition and Reconciliation of Non-GAAP Financial Measures
The Company’s results determined in accordance with U.S. generally accepted accounting principles (GAAP) are referred to as “as reported” or "GAAP" results. Some of the information presented in this press release reflects the Company’s “as reported” or "GAAP" results adjusted to exclude amounts; including the associated tax effects, relating to restructuring initiatives, asset impairment charges, environmental charges, acquisition-related costs, gains or losses from the disposition of businesses, excess property insurance recoveries, pension settlement charges, and certain other items, if any, including other income tax-related adjustments and/or events, the exclusion of which management believes improves comparability and analysis of the ongoing operating performance of the business. These adjustments, which are referred to as "non-base", result in the non-GAAP financial measures referred to in this press release as “Base Earnings” and “Base Earnings per Diluted Share.”
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Sonoco continues to provide all information required by GAAP, but it believes that evaluating its ongoing operating results may not be as useful if an investor or other user is limited to reviewing only GAAP financial measures. Sonoco uses these non-GAAP financial measures for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of each business unit against plan/forecast all the way up through the evaluation of the Chief Executive Officer’s performance by the Board of Directors. In addition, these same non-GAAP measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.
Sonoco management does not, nor does it suggest that investors should, consider these non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Sonoco presents these non-GAAP financial measures to provide users information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance. Material limitations associated with the use of such measures are that they do not reflect all period costs included in operating expenses and may not reflect financial results that are comparable to financial results of other companies that present similar costs differently. Furthermore, the calculations of these non-GAAP measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.
To compensate for these limitations, management believes that it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP measures that exclude certain elements, as described above. Whenever Sonoco uses a non-GAAP financial measure, except with respect to guidance, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Whenever reviewing a non-GAAP financial measure, investors are encouraged to fully review and consider the related reconciliation as detailed below. Second-quarter and full-year 2018 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 tax effect 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.
Non-GAAP Adjustments | |||||||||||||||||
Three Months Ended April 1, 2018 | GAAP | Restructuring / Asset Impairment Charges(1) |
Other Adjustments(2) |
Base | |||||||||||||
Operating profit | $ | 110,098 | $ | 3,063 | $ | 120 | $ | 113,281 | |||||||||
Non-operating pension (income)/cost | (291 | ) | — | — | (291 | ) | |||||||||||
Interest expense, net | 13,355 | — | — | 13,355 | |||||||||||||
Income before income taxes | 97,034 | 3,063 | 120 | 100,217 | |||||||||||||
Provision for income taxes | 23,356 | 685 | 1,912 | 25,953 | |||||||||||||
Income before equity in earnings of affiliates | 73,678 | 2,378 | (1,792 | ) | 74,264 | ||||||||||||
Equity in earnings of affiliates, net of taxes | 1,247 | — | — | 1,247 | |||||||||||||
Net income | 74,925 | 2,378 | (1,792 | ) | 75,511 | ||||||||||||
Net (income) attributable to noncontrolling interests | (870 | ) | (5 | ) | — | (875 | ) | ||||||||||
Net income attributable to Sonoco | $ | 74,055 | $ | 2,373 | $ | (1,792 | ) | $ | 74,636 | ||||||||
Per Diluted Share* | $ | 0.73 | $ | 0.02 | $ | (0.02 | ) | $ | 0.74 | ||||||||
*Due to rounding individual items may not sum across | |||||||||||||||||
Non-GAAP Adjustments | |||||||||||||||||
Three Months Ended April 2, 2017 | GAAP | Restructuring / Asset Impairment Charges(3) |
Other Adjustments(4) |
Base | |||||||||||||
Operating profit | $ | 93,659 | $ | 4,111 | $ | 2,693 | $ | 100,463 | |||||||||
Non-operating pension (income)/cost | 3,686 | — | — | 3,686 | |||||||||||||
Interest expense, net | 12,058 | — | — | 12,058 | |||||||||||||
Income before income taxes | 77,915 | 4,111 | 2,693 | 84,719 | |||||||||||||
Provision for income taxes | 25,539 | 1,298 | (641 | ) | 26,196 | ||||||||||||
Income before equity in earnings of affiliates | 52,376 | 2,813 | 3,334 | 58,523 | |||||||||||||
Equity in earnings of affiliates, net of taxes | 1,954 | — | — | 1,954 | |||||||||||||
Net income | 54,330 | 2,813 | 3,334 | 60,477 | |||||||||||||
Net (income) attributable to noncontrolling interests | (597 | ) | (2 | ) | — | (599 | ) | ||||||||||
Net income attributable to Sonoco | $ | 53,733 | $ | 2,811 | $ | 3,334 | $ | 59,878 | |||||||||
Per Diluted Share* | $ | 0.53 | $ | 0.03 | $ | 0.03 | $ | 0.59 | |||||||||
*Due to rounding individual items may not sum across |
(1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. | |||||||||
(2)These amounts include the effect of the change in the US corporate tax rate on deferred tax adjustments totaling a gain of $1,975 and a small gain from a casualty loss insurance settlement partially offset by costs related to acquisitions and potential acquisitions. | |||||||||
(3)Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. | |||||||||
(4) Consists primarily of costs related to acquisitions and potential acquisitions which were partially offset by insurance settlement gains. Additionally, includes non-base tax charges related to settlement of an income tax audit in Canada. |
Three Months Ended | |||||||||||||||
FREE CASH FLOW* | April 1, 2018 | April 2, 2017 | |||||||||||||
Net cash provided by operating activities | $ | 119,765 | $ | 67,398 | |||||||||||
Purchase of property, plant and equipment, net | (36,008 | ) | (48,974 | ) | |||||||||||
Cash dividends | (38,829 | ) | (36,840 | ) | |||||||||||
Free Cash Flow | $ | 44,928 | $ | (18,416 | ) | ||||||||||
Year Ended | |||||||||||||||
Estimated Low End | Estimated High End | Actual | |||||||||||||
FREE CASH FLOW* | December 31, 2018 | December 31, 2018 | December 31, 2017 | ||||||||||||
Net cash provided by operating activities | $ | 560,000 | $ | 580,000 | $ | 349,358 | |||||||||
Purchase of property, plant and equipment, net | (220,000 | ) | (220,000 | ) | (183,642 | ) | |||||||||
Cash dividends | (160,000 | ) | (160,000 | ) | (153,137 | ) | |||||||||
Free Cash Flow | $ | 180,000 | $ | 200,000 | $ | 12,579 | |||||||||
* Free Cash Flow is a non-GAAP measure that does not imply the amount of residual cash flow available for discretionary expenditures, as it excludes mandatory debt service requirements and other non-discretionary expenditures. |
Contact:Roger Schrum +843-339-6018 roger.schrum@sonoco.com
Source: Sonoco Products Company