Sonoco (NYSE: SON), one of the largest global sustainable packaging
companies, today provided updated guidance for its second quarter
net income per diluted share, ending July 3, 2022, and announced
its earnings release date and investor conference call information.
Sonoco Provides Second-Quarter 2022
Financial Update Based on strong April and May results
combined with its current June forecast, Sonoco expects
second-quarter 2022 GAAP net income to be in a range of $1.27 to
$1.37 per diluted share compared to a loss of ($3.34) per diluted
share in the prior year quarter. Second-quarter GAAP net income
reflects estimated after-tax restructuring charges,
acquisition-related expenses, including certain aspects of purchase
accounting, intangibles amortization expense, an increase in the
LIFO reserve and other items. As a result, the Company expects
second-quarter 2022 base net income to be in a range of $1.60 to
$1.70 per diluted share, which at the mid-point is over 70 percent
above second-quarter 2021 base net income of $0.93 per diluted
share and over 30 percent above the Company’s previously
communicated second-quarter 2022 base net income guidance range of
$1.20 to $1.30 per diluted share. Sonoco reported GAAP net income
of $1.17 per diluted share and base net income of $1.85 per diluted
share in the first quarter of 2022. (See base net income
definition, explanation and reconciliation to GAAP net income later
in this release.)
Sonoco expects operating results to be
significantly better than previously projected due to sustained
customer demand particularly in its Consumer Packaging and All
Other segments, as well as continued strong performance in price
recovery. In addition, operating results are expected to benefit
from the continued strong performance of the Company’s Metal
Packaging business, which was acquired in the first quarter of
2022.
Information on Second Quarter Financial
Release Date and Management Conference Call Sonoco expects
to report its second-quarter financial results before the NYSE
opens for trading on Thursday, July 21, 2022. Management will host
a conference call and webcast to review those results beginning at
11 a.m. ET on that day. The live conference call and a
corresponding presentation will be made available via the Company’s
Investor Relations website at https://investor.sonoco.com. To
participate via telephone, please register in advance at
https://register.vevent.com/register/BI3b6724abceb64b5aae827c935441ab9d.
Upon registration, all telephone participants will receive the
dial-in number along with a unique PIN number that can be used to
access the call. A replay of the conference call and webcast will
be archived on the Company's website for at least 30 days.
About Sonoco Founded in 1899,
Sonoco (NYSE: SON) is a global provider of consumer, industrial,
healthcare and protective packaging. With net sales of
approximately $5.6 billion in 2021, the Company has 22,000
employees working in approximately 300 operations in 32 countries,
serving some of the world’s best-known brands in some 85 nations.
Sonoco is committed to creating sustainable products, services and
programs for our customers, employees and communities that support
our corporate purpose of Better Packaging. Better Life. The Company
ranked first in the Packaging sector on Fortune’s World’s Most
Admired Companies for 2022 as well as being included in Barron’s
100 Most Sustainable Companies for the fourth consecutive year. For
more information, visit www.sonoco.com.
Non-GAAP Financial Measures and
Reconciliations Base net income per diluted share
mentioned in this release is a non-GAAP financial measure adjusted
to exclude restructuring-related items, asset impairment charges,
acquisition/divestiture-related expenses, non-operating pension
costs, amortization expense on acquisition intangibles, certain
income tax-related events and other items, if any, the exclusion of
which the Company believes improves comparability and analysis of
the ongoing operating performance of the business.
This non-GAAP financial measure is not in
accordance with, or an alternative for, generally accepted
accounting principles and may be different from non-GAAP financial
measures used by other companies. In addition, this non-GAAP
financial measure is not based on any comprehensive set of
accounting rules or principles. Sonoco management does not, nor
does it suggest that investors should, consider this non-GAAP
financial measure in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. Sonoco
presents this non-GAAP financial measure 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 calculation of this non-GAAP measures is based on
subjective determinations of management regarding the nature and
classification of events and circumstances that the investor may
find material and view differently.
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.
For the second quarter ending July 3, 2022, the
Company currently projects GAAP net income attributable to Sonoco
will likely range from $125 million to $135 million, or $1.27 to
$1.37 per diluted share. The Company currently projects that
after-tax non-GAAP adjustments will total approximately $33
million, largely consisting of approximately $16 million of items
related to amortization of acquired intangibles, $10 million in
acquisition and restructuring-related costs, and $5 million in LIFO
reserve adjustments, resulting in base earnings of $158 million to
$167 million, or $1.60 to $1.70 per diluted share. However, actual
non-GAAP adjustments could be substantially different and other
expenses may be incurred during the remainder of the quarter that
are not currently contemplated.
The following tables present the reconciliations
of the Company’s non-GAAP financial measures to their most directly
comparable GAAP financial measures for the three-month periods
ended April 3, 2022, April 4, 2021 and July 4, 2021:
|
For the
three months ended April 3, 2022 |
Dollars in thousands, except per share data |
GAAP |
|
Restructuring/Asset
Impairments(1) |
|
Amortization of Acquisition
Intangibles(2) |
|
Acquisition/ Divestiture
Related(3) |
|
Other Adjustments(4) |
|
Base |
Operating profit |
$ |
169,061 |
|
|
$ |
12,142 |
|
$ |
18,800 |
|
$ |
48,352 |
|
$ |
12,438 |
|
|
$ |
260,793 |
|
Non-operating pension costs |
|
1,324 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
(1,324 |
) |
|
|
— |
|
Interest
expense, net |
|
19,065 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
19,065 |
|
Income
before income taxes |
|
148,672 |
|
|
|
12,142 |
|
|
18,800 |
|
|
48,352 |
|
|
13,762 |
|
|
|
241,728 |
|
Provision
for income taxes |
|
35,289 |
|
|
|
1,635 |
|
|
4,630 |
|
|
11,756 |
|
|
7,738 |
|
|
|
61,048 |
|
Income
before equity in earnings of affiliates |
|
113,383 |
|
|
|
10,507 |
|
|
14,170 |
|
|
36,596 |
|
|
6,024 |
|
|
|
180,680 |
|
Equity in
earnings of affiliates, net of tax |
|
2,224 |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
2,224 |
|
Net
income |
|
115,607 |
|
|
|
10,507 |
|
|
14,170 |
|
|
36,596 |
|
|
6,024 |
|
|
|
182,904 |
|
Net
(income)/loss attributable to noncontrolling interests |
|
(274 |
) |
|
|
61 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(213 |
) |
Net income
attributable to Sonoco |
|
115,333 |
|
|
|
10,568 |
|
|
14,170 |
|
|
36,596 |
|
|
6,024 |
|
|
|
182,691 |
|
Per diluted
common share* |
$ |
1.17 |
|
|
$ |
0.11 |
|
$ |
0.14 |
|
$ |
0.37 |
|
$ |
0.06 |
|
|
$ |
1.85 |
|
*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. In the first
quarter of 2022, the Company recognized asset impairment charges of
$5,713 related to the Company's decision to exit its operations in
Russia given the ongoing Russia-Ukraine conflict. Of the $12,142 in
restructuring/asset impairments, approximately $6,300 were cash
expenses.
(2) Beginning in 2022, the Company redefined base
results to exclude amortization of intangible assets related to
acquisitions.
(3) Consists of legal, professional, and other
service fees related to acquisition and divestiture transactions,
whether potential or consummated, and charges related to the
partial amortization of inventory "step-ups" associated with
purchase accounting adjustments on acquisition transactions. The
majority of these charges relate to the January 2022 acquisition of
Ball Metalpack.
(4) Other Adjustments include after-tax charges of
$14,217 related to increases in the Company's LIFO reserve. The
remaining $8,193 after-tax net gain relates to certain derivative
transactions and discrete tax adjustments, which were partially
offset by non-operating pension charges.
|
For the
three months ended April 4, 2021 |
Dollars in thousands, except per share data |
GAAP |
|
Restructuring/Asset
Impairments(1) |
|
Amortization of Acquisition
Intangibles(2) |
|
Acquisition/ Divestiture
Related(3) |
|
Other Adjustments(4) |
|
Base |
Operating profit |
$ |
120,309 |
|
$ |
6,846 |
|
$ |
12,749 |
|
$ |
10,025 |
|
$ |
2,487 |
|
|
$ |
152,416 |
Non-operating pension costs |
|
7,284 |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,284 |
) |
|
|
— |
Interest
expense, net |
|
17,731 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
17,731 |
Income
before income taxes |
$ |
95,294 |
|
$ |
6,846 |
|
$ |
12,749 |
|
$ |
10,025 |
|
$ |
9,771 |
|
|
$ |
134,685 |
Provision
for income taxes |
|
24,045 |
|
|
1,626 |
|
|
3,158 |
|
|
2,123 |
|
|
3,510 |
|
|
|
34,462 |
Income
before equity in earnings of affiliates |
$ |
71,249 |
|
$ |
5,220 |
|
$ |
9,591 |
|
$ |
7,902 |
|
$ |
6,261 |
|
|
$ |
100,223 |
Equity in
earnings of affiliates, net of tax |
|
1,044 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
1,044 |
Net
income |
$ |
72,293 |
|
$ |
5,220 |
|
$ |
9,591 |
|
$ |
7,902 |
|
$ |
6,261 |
|
|
$ |
101,267 |
Net loss
attributable to noncontrolling interests |
|
4 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
4 |
Net income
attributable to Sonoco |
$ |
72,297 |
|
$ |
5,220 |
|
$ |
9,591 |
|
$ |
7,902 |
|
$ |
6,261 |
|
|
$ |
101,271 |
Per diluted
common share* |
$ |
0.71 |
|
$ |
0.05 |
|
$ |
0.09 |
|
$ |
0.08 |
|
$ |
0.06 |
|
|
$ |
1.00 |
*Due to rounding individual items may not sum across |
|
|
|
|
(1) Restructuring 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. Asset impairment charges
totaling $4,149 were recognized in 2021 related to certain assets
in the Company's perimeter-of-the-store thermoforming operations
and temperature-assured packaging business for which the projected
undiscounted cash flows were not sufficient to cover their carrying
value.
(2) Beginning in 2022, the Company redefined base
results to exclude amortization of intangible assets related to
acquisitions. Prior year has been revised to conform with current
year presentation.
(3) Consists of legal, professional, and other
service fees related to acquisition and divestiture transactions,
whether potential or consummated.
(4) Includes non-operating pension costs, the loss
from the divestiture of the U.S. display and packaging business,
partially offset by gains from insurance proceeds.
|
|
For the
three months ended July 4, 2021 |
Dollars in thousands, except per share data |
|
GAAP |
|
Restructuring/Asset
Impairment(1) |
|
Amortization of Acquisition Intangibles |
|
Other Adjustments(2) |
|
Base |
Operating profit |
|
$ |
135,291 |
|
|
$ |
(1,445 |
) |
|
$ |
12,111 |
|
$ |
(5,236 |
) |
|
$ |
140,721 |
Non-operating pension costs |
|
|
555,009 |
|
|
|
— |
|
|
|
— |
|
|
(555,009 |
) |
|
|
— |
Interest
expense, net |
|
|
14,794 |
|
|
|
— |
|
|
|
— |
|
|
2,165 |
|
|
|
16,959 |
Loss from
the early extinguishment of debt |
|
|
20,184 |
|
|
|
— |
|
|
|
— |
|
|
(20,184 |
) |
|
|
— |
(Loss)/income before income taxes |
|
$ |
(454,696 |
) |
|
$ |
(1,445 |
) |
|
$ |
12,111 |
|
$ |
567,792 |
|
|
$ |
123,762 |
(Benefit
from) Provision for income taxes |
|
|
(118,151 |
) |
|
|
715 |
|
|
|
3,000 |
|
|
146,939 |
|
|
|
32,503 |
(Loss)/income before equity in earnings of affiliates |
|
$ |
(336,545 |
) |
|
$ |
(2,160 |
) |
|
$ |
9,111 |
|
$ |
420,853 |
|
|
$ |
91,259 |
Equity in
earnings of affiliates, net of tax |
|
|
2,306 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
2,306 |
Net
(loss)/income |
|
$ |
(334,239 |
) |
|
$ |
(2,160 |
) |
|
$ |
9,111 |
|
$ |
420,853 |
|
|
$ |
93,565 |
Net loss
attributable to noncontrolling interests, net of tax |
|
|
169 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
169 |
Net
(loss)/income attributable to Sonoco |
|
$ |
(334,070 |
) |
|
$ |
(2,160 |
) |
|
$ |
9,111 |
|
$ |
420,853 |
|
|
$ |
93,734 |
Diluted
weighted average common shares outstanding(3) |
|
|
100,082 |
|
|
|
— |
|
|
|
— |
|
|
543 |
|
|
|
100,625 |
Per diluted
common share* |
|
$ |
(3.34 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.09 |
|
$ |
4.18 |
|
|
$ |
0.93 |
*Due to rounding individual items may not sum across |
|
|
|
|
|
|
|
|
(1) Restructuring/Asset impairment charges are a
recurring item as Sonoco’s restructuring actions 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) Other Adjustments are primarily comprised of
costs related to potential and actual acquisitions and
divestitures, non-operating pension costs (including settlement
charges), losses on the early extinguishment of debt, gains from
insurance proceeds, and gains/losses from the divestiture of
businesses, net of the applicable tax effect.
(3) Due to the magnitude of certain expenses
considered by management to be non-base, the Company reported a
2021 GAAP net loss attributable to Sonoco. In instances where a
company incurs a net loss, including potential common shares in the
denominator of a diluted earnings per-share computation will have
an antidilutive effect on the per-share loss. GAAP therefore
requires the exclusion of any unexercised share awards or other
like instruments for purposes of calculating weighted average
shares outstanding. Accordingly, the Company did not include any
unexercised share awards or other like instruments in calculating
weighted average shares outstanding for GAAP purposes in the table
above, which resulted in basic weighted average common shares
outstanding and diluted weighted average common shares outstanding
being the same. However, the Company also presents base net income
attributable to Sonoco, which excludes the net non-base items. In
order to maintain consistency and comparability of base diluted
EPS, dilutive unexercised share awards were included in the
calculation to the same extent they would have been had GAAP net
income attributable to Sonoco been equal to base net income
attributable to Sonoco.
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. 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, price/cost recovery across Sonoco’s business, expected
benefits from the acquisition of Ball Metalpack, trends in customer
demand, 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, including, among
other things, risks relating to Sonoco’s ongoing integration of
Ball Metalpack, Sonoco’s ability to manage inflationary pressure
and other macroeconomic trends, including demand trends, and
shortages or disruptions in supply chains. Therefore, actual
results may differ materially from those expressed or forecasted in
such forward-looking statements.
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 Investor Relations
website, https://investor.sonoco.com.
Contact:
Lisa Weeks
843-383-7524
lisa.weeks@sonoco.com
Sonoco Products (NYSE:SON)
Historical Stock Chart
From Apr 2024 to May 2024
Sonoco Products (NYSE:SON)
Historical Stock Chart
From May 2023 to May 2024