HARTSVILLE, S.C., Dec. 7, 2012 /PRNewswire/ -- Sonoco (NYSE:
SON) Chairman and Chief Executive Officer Harris E. DeLoach Jr., President, Chief
Operating Officer and CEO-elect M. Jack
Sanders and Vice President and Chief Financial Officer
Barry L. Saunders, today provided
the investment community in New
York with an update on the Company's 2012 performance and
outlined the Company's strategic initiatives and financial
outlook.
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2012 Base Earnings Guidance Unchanged; 2013 Estimates
Established
Sonoco expects fourth quarter and full-year 2012
base earnings to be unchanged from the Company's previously
announced guidance of $.52 to $.56
and $2.17 to $2.21 per diluted share,
respectively. The Company reported fourth quarter and full-year
2011 base earnings of $.46 and
$2.29 per diluted share,
respectively. Base earnings and base earnings per diluted share are
non-GAAP financial measures adjusted to remove restructuring
charges, asset impairment charges, acquisition 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.
"At this point in the quarter, we have not seen any significant
changes in business conditions that would cause us to revise
guidance, but customer order patterns remain somewhat erratic and
overall economic activity is uncertain," said Sonoco's CFO
Saunders.
"Sonoco expects to recognize about $12
million in additional tax expense in the fourth quarter of
2012 associated with the repatriation of cash held outside
the United States. This one-time
charge is excluded from the Company's base earnings projections,"
Saunders said.
Commenting on the Company's 2012 expected results, DeLoach said,
"Obviously, our performance in 2012 is not what we expected when we
began the year. That said, we have weathered a difficult economic
and operating environment and made changes we believe will improve
our performance in the future."
Sonoco estimates 2013 base earnings per diluted share to be in
the range of $2.24 to $2.32, with a
projected midpoint of $2.28 per
diluted share. Saunders said the Company's midpoint guidance
assumes a $.20 per share improvement
stemming from modest volume growth, productivity improvements and a
slightly positive price/cost relationship. Offsetting these
improvements is approximately $.11 in
negative items, including an estimated $.09 per share impact from higher year-over-year
pension expenses.
Free Cash Flow Outlook Provided; Capital Deployment Plans
Outlined
DeLoach pointed out that despite lower expected
earnings through the first nine months of 2012, cash flow from
operations has increased 125 percent year over year to nearly
$297 million, due to lower pension
and post retirement contributions and beneficial changes in working
capital. For 2012, the Company expects to generate free cash flow
of approximately $90 million, after
paying approximately $120 million in
dividends to shareholders.
Looking forward, Sonoco is projecting that annual cash flow from
operations could average approximately $460
million over the next several years. For 2013, free cash
flow, after dividends, is estimated to increase to approximately
$130 million, due primarily to
anticipated lower pension contributions, CFO Saunders said.
President, COO and CEO-elect Sanders outlined Sonoco's
anticipated capital deployment plans saying, "Our first priority
will be to maintain our strong investment grade credit rating. With
the repatriation of cash and the use of free cash flow, we expect
to make significant debt-reduction payments in 2013.
"In addition, we plan to continue investing in our targeted
growth businesses while optimizing operations in our more mature
businesses. Our dividend policy is unchanged and we expect to
continue rewarding our shareholders with cash dividends as we have
for 350 consecutive quarters, going back to 1925. For 2013 through
2015, our remaining available cash is expected to total
approximately $260 million and be
available for targeted acquisitions and/or share repurchases."
Strategy Focusing Resources to Targeted Growth
Businesses
Sanders said that Sonoco will be focusing
resources and investment in businesses which serve faster growing
markets, including the Company's Consumer Packaging and Protective
Solutions businesses and selected emerging market development
opportunities for composite cans and tubes and cores.
"We are targeting to grow our top-line sales to between
$5.5 and $6.0 billion by the end of
2015," said Sanders. "We must drive organic growth in our faster
growing businesses and optimize operations in our more mature
businesses by focusing on market share management and cost
optimization."
Sanders cited the following 2012 and 2013 growth projects, by
business segment, as examples of the Company's growth strategy.
- Rigid Paper and Closures
- Sonoco is establishing a new composite can production facility
in Johor Bahru, Malaysia, to meet
the growing appetite for premium stacked chips throughout
Asia.
- Stacked chip capacity is likely to be added in 2013 in
Brazil and a review of growth
opportunities in Eastern Europe is
underway.
- Rigid Plastics
- Sonoco started up in the third quarter of 2012 a new
multilayer, trim-in-place thermoforming line at its Waynesville, N.C., facility to produce of a
variety of containers for chilled and thermally processed shelf
stable foods.
- The Company plans to invest $7
million in 2013 to add a third multilayer, barrier bottle
production line for nutraceutical beverages at its Columbus, Ohio, production facility.
- In the third quarter of 2012, the Company commenced commercial
operation of a new $15 million
142,000-square-foot plant in New Albany,
Ohio, to produce PET personal care bottles.
- Flexible Packaging
- Investment is being made to add a new rotogravure press to the
Company's Morristown, Tenn.,
facility in 2013.
- Display and Packaging
- Expanded packaging fulfillment capacity in Brazil and a new in-DC (distribution center)
facility in the U.S. were put in operation in 2012.
- Protective Solutions
- An investment of $15 million is
planned in 2013 to build two new custom-molded foam fabricating
facilities in the United States
and Mexico to serve the growing
automotive component market.
Key Takeaways
Sanders concluded the Company's review
by saying, "2013 is projected to be a better year, but again we
don't expect any real help from the global economy. In
addition, we expect to face pension headwinds. However, free cash
flow, after dividends, is expected to increase by up to 40 percent
next year to $130 million."
"Our extended outlook through 2015 could see our top line reach
$5.5 billion and earnings growing at
compound rate of about 8 percent. To fully meet our financial
targets we may need to make some minor course corrections along the
way, including considering how we are organized so we can better
satisfy the customer."
Event Replay
A replay of Sonoco's presentation will be
available beginning at 10 a.m. ET on
Dec. 7, 2012, and continue through
midnight ET on Dec. 17, 2012. The toll-free replay number in the
U.S. is 888/286-8010 and the international replay number is
+617/801-6888. The replay access code is 97565999. The
webcast and presentation of the event will be archived for 90 days
on the Company's website at www.sonoco.com, under Conference
Calls.
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 $4.5 billion, the Company has more than 19,600
employees working in over 340 operations in 34 countries, serving
many of the world's best known brands in some 85 nations. Sonoco is
a proud member of the 2012/2013 Dow Jones Sustainability World
Index. For more information on the Company, visit our website at
www.sonoco.com.
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. The words "estimate," "project," "intend,"
"expect," "believe," "consider," "plan," "strategy," "opportunity,"
"target," "anticipate," "objective," "goal," "guidance," "outlook,"
"forecast," "future," "will," "would," or the negative thereof, and
similar expressions identify forward-looking statements.
Forward-looking statements include, but are not limited to,
statements regarding offsetting high raw material costs, improved
productivity and cost containment, adequacy of income tax
provisions, refinancing of debt, adequacy of cash flows,
anticipated amounts and uses of cash flows, effects of acquisitions
and dispositions, adequacy of provisions for environmental
liabilities, financial strategies and the results expected from
them, continued payments of dividends, stock repurchases, producing
improvements in earnings, financial results for future periods and
creation of long-term value for shareholders.
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, expectations, beliefs, plans,
strategies 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 and uncertainties include, without limitation:
- availability and pricing of raw materials;
- success of new product development and introduction;
- ability to maintain or increase productivity levels and contain
or reduce costs;
- ability to manage the mix of business to take advantage of
growing markets while reducing cyclical effects of some of the
Company's existing business on operating results;
- international, national and local economic and market
conditions;
- availability of credit to us, our customers and/or its
suppliers in needed amounts and/or on reasonable terms;
- fluctuations in obligations and earnings of pension and
postretirement benefit plans;
- pricing pressures, demand for products and ability to maintain
market share;
- continued strength of our paperboard-based tubes and cores, and
composite can operations;
- anticipated results of restructuring activities;
- resolution of income tax contingencies;
- ability to successfully integrate newly acquired businesses
into the Company's operations;
- ability to win new business and/or identify and successfully
close suitable acquisitions at the levels needed to meet growth
targets;
- rate of growth in foreign markets;
- foreign currency, interest rate and commodity price risk and
the effectiveness of related hedges;
- liability for and anticipated costs of environmental
remediation actions;
- accuracy of assumptions underlying projections related to
goodwill impairment testing, and accuracy of management's
assessment of goodwill impairment;
- actions of government agencies and changes in laws and
regulations affecting the Company;
- loss of consumer or investor confidence; and
- economic disruptions resulting from terrorist activities.
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 Securities and
Exchange Commission. Such reports are available from the Securities
and Exchange Commission's public reference facilities and its
website, sec.gov, and from the Company's investor relations
department and the Company's website, sonoco.com.
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.
SOURCE Sonoco