Sonoco (NYSE: SON), one of the largest sustainable global packaging
companies, today reported financial results for its second quarter
ended July 3, 2022.
Second Quarter Highlights
- Net sales were a record $1.91 billion, an approximately 38
percent increase from last year's second quarter 2021 sales of
$1.38 billion.
- GAAP net income per diluted share was $1.33, compared with a
loss of $(3.34) in the same period in 2021.
- GAAP net income includes net after-tax, non-base charges
totaling $42.1 million, or $0.43 per diluted share. These charges
largely consist of amortization of acquired intangibles,
acquisition-related expenses, including certain aspects of purchase
accounting, other restructuring costs, and an increase in the Last
In, First Out ("LIFO") inventory reserve. In the second quarter of
2021, GAAP earnings included net after-tax, non-base charges of
$427.8 million, or $4.27 per diluted share, as further described in
the Second Quarter Review.
- Base net income attributable to Sonoco ("base earnings") was
$1.76 per diluted share, an approximately 89 percent increase from
$0.93 per diluted share in the same period of 2021. The 2021 base
earnings results throughout the release have been revised to
conform with the Company’s base earnings definition which excludes
amortization of acquisition intangibles. (See base earnings
definition, explanation and reconciliation to GAAP earnings later
in this release.)
- Cash flow from operations was $184.5 million for the first half
of 2022, compared with $102.0 million in the same period of 2021.
Free cash flow was a provision of $40.3 million, compared with $9.4
million generated in the same period of 2021. (See free cash flow
definition, explanation and reconciliation to cash flow from
operations later in this release.)
2022 Third-quarter and Full-Year
Guidance
- Third-quarter base earnings is expected to be in a range of
$1.35 to $1.45 per diluted share. Base net income for the third
quarter of 2021 was $1.00 per diluted share.
- The Company has increased its outlook for full-year base
earnings to a range of $6.20 to $6.30 per diluted share. Full-year
base earnings per diluted share in 2021 was $3.93.
- Full-year 2022 guidance for cash provided from operations
remains unchanged at a range of $690 million to $740 million and
free cash flow guidance remains at $365 million to $415
million.
Note: Third-quarter and full-year 2022 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: restructuring costs and
restructuring-related impairment charges,
acquisition/divestiture-related costs, gains or losses on the sale
of businesses or other assets, 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 CommentsCommenting on the Company’s
performance, Howard Coker, President and Chief Executive Officer,
said, "Our Sonoco team delivered strong second-quarter results
which exceeded the high-end of our raised guidance. Our
current-quarter performance represents a step-change improvement
year-over-year and resulted in record sales and record net income
driven by continued strong execution in our Consumer Packaging and
Industrial Paper Packaging segments. Overall, the Company's
second-quarter earnings primarily benefited from continued strong
strategic pricing performance across most of our businesses,
continued strong results from the Sonoco Metal Packaging ("Metal
Packaging") acquisition and productivity gains. These positive
factors were partially offset by the impact of foreign currency
translation.
"Our Consumer Packaging segment achieved record sales while
operating profit grew approximately 114 percent versus the
prior-year period primarily due to continued strong performance
from Metal Packaging and Global Rigid Paper Containers, continued
solid price/cost performance and improved productivity despite
continued supply chain disruptions. Our Industrial Paper Packaging
segment also produced record sales and operating profit, which
improved approximately 57 percent versus the prior year period
primarily from continued strong price/cost performance. Finally,
our All Other group of businesses showed improvement during the
quarter with operating profit up approximately 6 percent over the
same period in the prior year due to positive price/cost
performance and productivity."
Second Quarter ReviewNet sales for the second
quarter of 2022 were a record $1.91 billion, compared with last
year's second quarter sales of $1.38 billion. This growth was
driven by strong pricing performance and continued strong results
from the Metal Packaging acquisition. These positive factors were
partially offset by the negative impact from foreign currency
translation.
GAAP net income attributable to Sonoco in the second quarter of
2022 was $131.7 million, or $1.33 per diluted share, compared with
a loss of $(334.1) million, or $(3.34) per diluted share, in the
second quarter of 2021. Second quarter 2022 GAAP net income
included net after-tax, non-base charges totaling $42.1 million, or
$0.43 per diluted share. The largest components of the after-tax
charges included $15.7 million for amortization expense on
acquisition intangibles; $9.3 million in net acquisition-related
costs associated with the Metal Packaging acquisition, including
$6.1 million of charges related to purchase accounting fair value
"step-up" of the acquired inventory and $3.2 million of net
expenses mostly related to professional fees; $9.8 million of
impairment and restructuring-related charges; and a $4.8 million
charge from an increase in the Company's LIFO reserve. In the
second quarter of 2021, GAAP net loss attributable to Sonoco was
$(334.1) million or $(3.34) per diluted share, and included net
after-tax, non-base charges totaling $427.8 million, of which
$412.6 million related to non-operating pension costs, which were
primarily driven by the settlement and annuitization of the U.S.
defined pension plan; $15.0 million related to the early
extinguishment of debt, and $9.1 million for amortization expense
on acquisition intangibles.
Base net income in the second quarter of 2022 was $173.8
million, or $1.76 per diluted share, compared with $93.7 million,
or $0.93 per diluted share, in the same period of 2021. Base net
income, base earnings and base earnings per diluted share are
non-GAAP financial measures adjusted to remove
restructuring-related items, asset impairment charges,
acquisition/divestiture-related expenses, non-operating pension
costs, amortization expense on acquisition intangibles, changes in
LIFO inventory reserves, and 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. (See base earnings definition,
explanation and reconciliation to GAAP earnings later in this
release.)
GAAP gross profit was $387.0 million in the second
quarter of 2022 compared to $262.7 million in the same period of
2021. Quarterly gross profit as a percentage of sales was
approximately 20 percent compared to approximately 19 percent in
the second quarter of 2021. Second-quarter GAAP selling, general
and administrative (SG&A) expenses increased $50.2 million from
the prior-year quarter to $179.0 million. This increase reflects
higher amortization, acquisition, and normal operating SG&A
expenses stemming from the Metal Packaging acquisition; higher
employee compensation and benefit costs; and the non-recurrence of
prior-year gains on derivatives and the sale of previously-closed
facilities.
Segment ReviewSonoco reports its financial
results in two segments: Consumer Packaging and Industrial Paper
Packaging, with all remaining businesses reported as All Other.
Segment and All Other operating results do not include
restructuring and asset impairment charges, acquisition expenses,
LIFO adjustments, interest income and expense, income taxes,
non-operating pension costs, or certain other items, if any, the
exclusion of which the Company believes improves comparability and
analysis.
As previously disclosed, starting in 2022, the Company excludes
amortization expense on acquisition intangibles in determining
segment and All Other operating results. Prior period results have
been restated to conform to the current-year presentation.
Consumer PackagingSonoco’s Consumer Packaging
segment primarily serves prepared and fresh food markets along with
other packaging for direct-to-consumer products. The products
produced and sold within the Consumer Packaging segment consist
primarily of round and shaped rigid paper containers; steel
tinplate cans and aerosol containers; thermoformed plastic trays
and containers; and printed flexible packaging.
Second quarter 2022 sales for the segment were a record $990.0
million, compared with $597.8 million in the second quarter of
2021. Segment operating profit was $139.4 million in the second
quarter, compared with $65.3 million in the second quarter of
2021.
Segment sales increased approximately 66 percent compared to the
prior year's quarter due primarily to the Metal Packaging
acquisition and solid pricing performance. Overall, segment
volume/mix was essentially flat during the second quarter. Global
rigid paper containers volume/mix increased approximately 1 percent
as gains in Asia, Latin America and Europe more than offset
slightly lower volume in North America, which was impacted by
ongoing customers' supply chain issues. Flexible packaging volume
improved approximately 4 percent during the second quarter, which
was more than offset by a negative mix of business. Demand for
rigid plastic food containers declined as increased volume/mix from
prepared food markets was more than offset by volume declines from
fresh berry markets that were impacted by inclement weather and
plant consolidations.
Segment operating profit increased approximately 114 percent
compared to the prior year's second quarter due primarily to the
Metal Packaging acquisition, solid price/cost performance and
favorable productivity. As a result, segment operating margin
improved to approximately 14 percent in the second quarter of 2022
from approximately 11 percent in the prior-year quarter.
Industrial Paper PackagingThe Industrial Paper
Packaging segment serves a variety of customers who use its
products to package their goods for transport, storage or sale or
to produce similar fiber-based products. The primary products
produced and sold within the Industrial Paper Packaging segment
include fiber-based tubes, cones, and cores; fiber-based protective
packaging and components; wooden, metal and composite wire and
cable reels and spools; and recycled paperboard. The segment’s
recycling business is a source of key inputs needed to produce the
Company’s products with incompatible and excess recycled materials
sold to third parties.
Second quarter 2022 sales for the segment increased for the
eighth consecutive quarter to a record $727.4 million, compared
with $608.5 million in the second quarter of 2021. Segment
operating profit was a record $94.2 million in the second quarter
of 2022, compared with $59.8 million in the same quarter last
year.
Segment sales increased approximately 20 percent from the prior
year's second quarter largely due to strong pricing performance,
modestly offset by the negative impacts of foreign exchange and
lower volume/mix. Volume/mix declined approximately 2 percent in
the second quarter as tube and core volume/mix gains in North
America and Latin America were more than offset by volume declines
in global paper, fiber protective packaging and tube, core and cone
operations in Europe and Asia.
Segment operating profit improved approximately 57 percent
compared to the prior-year's quarter due primarily to strong
price/cost performance modestly offset by lower volume/mix. Segment
operating margin improved to approximately 13 percent in the second
quarter of 2022 from approximately 10 percent in the prior-year
quarter.
All OtherBusinesses grouped as All Other
include healthcare packaging, protective and retail security
packaging and industrial plastic products. These businesses include
the following products and services: thermoformed rigid plastic
trays and devices; custom-engineered molded foam protective
packaging and components; temperature-assured packaging; injection
molded and extruded containers, spools and parts; retail security
packaging, including printed backer cards, thermoformed blisters
and heat-sealing equipment; and paper amenities.
All Other second quarter 2022 sales were $195.9 million,
compared with $176.4 million in the second quarter of 2021. All
Other operating profit was $16.5 million in the current quarter,
compared to $15.6 million in the second quarter of 2021.
Sales increased approximately 11 percent from the prior-year
quarter due primarily to strong pricing performance. Volume/mix for
the businesses in All Other was essentially flat as growth in
industrial plastics was offset by slight declines in retail
security and temperature-assured packaging.
Total operating profit for the All Other businesses improved by
approximately 6 percent from the prior year's second quarter due
primarily to positive price/cost performance and favorable
productivity, partially offset by the negative impact of foreign
exchange. Total operating margin was approximately 8.5 percent
which was essentially flat with the second quarter of 2021.
Corporate/TaxGAAP net interest expense for the
second quarter of 2022 increased to $23.2 million, compared with
$14.8 million during the same period in 2021, primarily due to
higher debt balances stemming from debt issuances related to the
financing of the Metal Packaging acquisition. The second-quarter
2022 effective tax rates on GAAP and base earnings were 25.8
percent and 25.0 percent, respectively, compared with 26.0 percent
and 26.3 percent, respectively, in the prior year’s second quarter.
The GAAP tax rate was relatively flat quarter over quarter,
however, the base rate for 2022 was lower than in the prior-year
quarter due to a difference in the mix of base earnings by
jurisdiction.
Year-to-date ResultsFor the first
six months of 2022, net sales were a record $3.68 billion, up
$948.3 million, compared with $2.74 billion in the first six months
of 2021. Sales improved approximately 35 percent in the first half
of the year driven by strong pricing performance and sales added
from the Metal Packaging acquisition. These positive factors were
partially offset by the negative impact of foreign exchange and the
April 2021 divestiture of the U.S. display and packaging
business.
GAAP net income attributable to Sonoco for the first half of
2022 was $247.0 million or $2.50 per diluted share, compared with a
net loss of $(261.8) million or $(2.60) per diluted share in the
same period in 2021. Current year-to-date net income includes
$109.5 million of after tax charges including $45.9 million in net
acquisition-related costs associated with the Metal Packaging
acquisition, $29.9 million for amortization expense on acquisition
intangibles, $20.3 million of impairment and restructuring-related
charges and other items netting to $13.4 million primarily
reflecting an increase in the Company's LIFO reserve. The net loss
in the first half of 2021 included $456.8 million in after-tax
charges, including $418.0 million related to non-operating pension
costs, driven by the previously mentioned pension settlement
charge, $18.7 million for amortization expense on acquisition
intangibles, and $15.0 million related to the early extinguishment
of debt. The remaining $5.1 million net after-tax charge included
acquisition/divestiture-related costs, a loss on the disposition of
the Company's U.S. display and packaging business, and
restructuring and asset impairment charges, which were partially
offset by a hedge gain related to a Euro-denominated loan
repayment, a foreign VAT refund, including applicable interest, and
life insurance gains.
Base net income for the first six months of 2022 was a record
$356.5 million or $3.61 per diluted share, compared with $195.0
million or $1.93 per diluted share in the same period of 2021. This
improvement in base net income in the first half of 2022 was
primarily due to strong price/cost performance, earnings from the
Metal Packaging acquisition, and productivity improvements. These
gains were partially offset by the 2021 divestiture of the
Company's U.S. display and packaging business. (See base net income
definition, explanation and reconciliation to GAAP earnings later
in this release.)
Current year-to-date GAAP gross profit was $758.6 million,
compared with $540.6 million in the same period in 2021.
Year-to-date gross profit as a percentage of sales in 2022 was
approximately 21 percent, compared with approximately 20 percent in
2021. GAAP selling, general and administrative expense increased
$95.3 million, largely driven by higher acquisition-related costs,
additional acquisition intangibles amortization expense, and higher
employee compensation and benefit costs.
Cash Flow and Free Cash FlowCash generated from
operations for the first six months of 2022 was $184.5 million,
compared with $102.0 million in the same period of 2021, an
increase of $82.5 million. While GAAP net income increased by
$509.3 million, this was partially offset by the year-over-year
change in non-cash after-tax pension and post-retirement plan
expense of $415.8 million which was driven by the pension
settlement in second quarter of 2021. The prior year's settlement
also led to pension cash contributions of $162.4 million in 2021
compared to $30.8 million in 2022. This period-over-period change
increased cash provided from operations by $131.5 million in the
current year. Additionally, net working capital was a net use of
$258.5 million of cash in the first six months of 2022, compared
with a net use of $45.6 million of cash in the same period last
year. While inflation in the current year is a key driver of that
increase, seasonal inventory build in the Company's newly acquired
Metal Packaging business also contributed to the change.
Free cash flow for the first six months of 2022 was a provision
of $40.3 million, compared with $9.4 million of cash generated in
the same period last year. This increase of $30.9 million was
driven by higher operating cash flow partially offset by higher net
capital spending. During the first six months of 2022, net capital
expenditures were $144.1 million, compared with $92.5 million
in the same period last year. 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. (See free cash flow
description and reconciliation later in this release. Free cash
flow is defined as cash flow from operations minus net capital
expenditures. Net capital expenditures are defined as capital
expenditures minus proceeds from, and/or plus costs incurred in,
the disposition of capital assets.)
The Company has continued to provide value to shareholders
through cash dividends and, from time to time, targeted stock
repurchases. Total year-to-date dividends paid increased to $91.5
million in 2022 compared to $90.4 million in the prior-year
period.
As of July 3, 2022, total debt was approximately $3.13
billion, compared with $1.61 billion as of December 31, 2021. The
Company's total-debt-to-total-capital ratio was 61.8 percent as of
July 3, 2022, compared to 46.5 percent at the end of 2021. The
increase in total debt stems from the debt incurred to fund the
Metal Packaging acquisition. Cash and cash equivalents were $175.0
million as of July 3, 2022, compared with $171.0 million at
December 31, 2021.
Third Quarter and Full-Year 2022 OutlookThe
Company expects third-quarter base earnings to be in the range of
$1.35 to $1.45 per diluted share, compared with $1.00 per diluted
share reported in the third quarter of 2021, with base earnings
revised for the exclusion of amortization expense on acquisition
intangibles. Full-year 2022 base earnings are expected to be
between $6.20 to $6.30 per diluted share, compared with 2021 base
earnings of $3.93 per diluted share. This full-year 2022 outlook
has been increased at the mid-point by approximately 17 percent
from the Company's previous guidance of $5.25 to $5.45 per diluted
share. This guidance assumes a base effective tax rate between 24.5
percent and 25.5 percent in the third quarter and for the full
year.
Full-year 2022 cash flow from operations and free cash flow
guidance remains unchanged at a range of $690 million to $740
million and $365 million to $415 million, respectively. This
outlook takes into consideration the Company's increased full-year
net income outlook, somewhat offset by higher working capital
balances, primarily due to a combination of increased business
activity and inflation. Net capital spending projections for 2022
remain unchanged at approximately $325 million.
Although the Company believes the assumptions reflected in the
range of guidance are reasonable, given the uncertainty regarding
the future performance of the overall economy, continued effects of
the pandemic on global supply chains, and potential changes in raw
material prices, other costs, and the Company's effective tax rate,
as well as other risk and uncertainties, including those described
below, actual results could vary substantially.
Commenting on the Company's outlook, Coker said, "I am extremely
proud of the way our team has advanced our value-creation strategy
to produce the best first-half financial operating performance in
the history of Sonoco. We have significantly improved the
performance of our core Consumer and Industrial businesses, and
with the addition of Metal Packaging, we have strengthened our
portfolio which gives us the confidence to further raise our base
earnings guidance for 2022.
"As we look to the third quarter, we expect our Consumer
Packaging segment will continue to benefit from the integration of
Metal Packaging, although segment margin percentage should
normalize for the remainder of the year. Additionally, the planned
shutdown of the Hartsville corrugated medium machine to complete
Project Horizon, which we believe will transform a 70-year-old
machine into the lowest cost producer of uncoated recycled
paperboard (URB) in North America, will occur within the third
quarter. This eight-week shutdown is expected to negatively impact
third-quarter Industrial Paper Packaging operating profit between
$10 million to $15 million.
"Sonoco remains committed to our strategic priorities of
simplifying our portfolio into fewer, but bigger businesses and
aligning our business structure around our talented and diverse
workforce. We plan to invest in expanding our core Consumer and
Industrial businesses to drive further growth and productivity
improvement in parallel with executing self-help actions and
achieving our sustainability goals. Finally, we remain focused on
returning cash to our shareholders with sector-leading, regular
dividends."
Conference Call WebcastManagement will host a
conference call and webcast to further discuss these results
beginning at 11 a.m. ET today. The live conference call and a
corresponding presentation can be accessed via the Internet at
www.sonoco.com, under the Investor Relations section, or 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 SonocoFounded 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 approximately 22,000 employees working in
more than 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 on
the Company, visit our website at www.sonoco.com.
Forward-looking StatementsStatements 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 “anticipate,” “assume,” “believe,” “committed,” “consider,”
“could,” “estimate,” “expect,” “forecast,” “future,” “goal,”
“guidance,” “intend,” “may,” “might,” “objective,” “opportunity,”
“outlook,” “plan,” “potential,” “project,” "should," “strategy,”
“target,” “will,” “would,” or the negative thereof, and similar
expressions identify forward-looking statements.
Forward-looking statements in this communication include
statements regarding, but not limited to: the Company’s future
operating and financial performance, including third quarter and
full-year 2022 outlook; expected benefits from and integration of
the Metal Packaging acquisition and the strategic advantages and
synergy, technology and process opportunities related thereto; the
effects of ongoing and anticipated restructuring and portfolio
management activities; the expected results as a result of the
delayed conversion, as well as expectations regarding the length of
the shutdown, of the Company’s Hartsville paper machine; efforts to
simplify the Company’s structure; efforts to recover higher costs
and stay ahead of the price/cost curve; the effects of the COVID-19
coronavirus on the Company’s business, operations, people, supply
chains and financial condition; inflation; outcomes of certain tax
issues and tax rates; the return of cash to shareholders; and
creation of long-term value and returns 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, 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, those related to: the Company’s ability to achieve the
benefits it expects from acquisitions, including the Metal
Packaging acquisition; the Company’s ability to execute on its
strategy, including with respect to acquisitions, cost management,
restructuring and capital expenditures, and achieve the benefits it
expects therefrom; the availability and pricing of raw materials,
energy and transportation, including the impact of potential
changes in tariffs and escalating trade wars, and the Company's
ability to pass raw material, energy and transportation price
increases and surcharges through to customers or otherwise manage
these pricing risks; the effects of the COVID-19 pandemic on the
Company’s results of operations, financial condition, value of
assets, liquidity, prospects and growth, and on the industries in
which it operates and that it serves; the costs of labor; the
effects of inflation and fluctuations in consumer demand on the
Company and the industries in which it operates and that it serves;
the Company’s ability to meet its goals relating to sustainability
and reduction of greenhouse gas emissions; the Company’s ability to
return cash to shareholders and create long-term value; and the
other risks, uncertainties and assumptions discussed in the
Company’s filings with the Securities and Exchange Commission,
including its most recent reports on Forms 10-K and 10-Q,
particularly under the heading “Risk Factors.” 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.
References to our Website AddressReferences 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 |
|
Six Months Ended |
|
|
|
July 3, 2022 |
|
July 4, 2021 |
|
July 3, 2022 |
|
July 4, 2021 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
1,913,332 |
|
|
$ |
1,382,754 |
|
|
$ |
3,684,314 |
|
|
$ |
2,736,058 |
|
Cost of sales |
|
1,526,331 |
|
|
|
1,120,101 |
|
|
|
2,925,748 |
|
|
|
2,195,504 |
|
Gross profit |
|
387,001 |
|
|
|
262,653 |
|
|
|
758,566 |
|
|
|
540,554 |
|
Selling, general
and administrative expenses |
|
178,962 |
|
|
|
128,807 |
|
|
|
369,323 |
|
|
|
274,037 |
|
Restructuring/Asset impairment charges |
|
10,563 |
|
|
|
(1,445 |
) |
|
|
22,705 |
|
|
|
5,401 |
|
Loss on divestiture
of business |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,516 |
|
Operating
profit |
|
197,476 |
|
|
|
135,291 |
|
|
|
366,538 |
|
|
|
255,600 |
|
Non-operating
pension cost |
|
1,677 |
|
|
|
555,009 |
|
|
|
3,002 |
|
|
|
562,293 |
|
Net interest
expense |
|
23,161 |
|
|
|
14,794 |
|
|
|
42,226 |
|
|
|
32,525 |
|
Loss from the early
extinguishment of debt |
|
— |
|
|
|
20,184 |
|
|
|
— |
|
|
|
20,184 |
|
Income/(Loss)
before income taxes |
|
172,638 |
|
|
|
(454,696 |
) |
|
|
321,310 |
|
|
|
(359,402 |
) |
Provision
for/(Benefit from) income taxes |
|
44,599 |
|
|
|
(118,151 |
) |
|
|
79,888 |
|
|
|
(94,106 |
) |
Income/(Loss)
before equity in earnings of affiliates |
|
128,039 |
|
|
|
(336,545 |
) |
|
|
241,422 |
|
|
|
(265,296 |
) |
Equity in earnings
of affiliates, net of tax |
|
3,728 |
|
|
|
2,306 |
|
|
|
5,952 |
|
|
|
3,350 |
|
Net
income/(loss) |
|
131,767 |
|
|
|
(334,239 |
) |
|
|
247,374 |
|
|
|
(261,946 |
) |
Net (income)/ loss
attributable to noncontrolling interests |
|
(95 |
) |
|
|
169 |
|
|
|
(369 |
) |
|
|
172 |
|
Net income/(loss)
attributable to Sonoco |
$ |
131,672 |
|
|
$ |
(334,070 |
) |
|
$ |
247,005 |
|
|
$ |
(261,774 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding – diluted |
|
98,686 |
|
|
|
100,082 |
|
|
|
98,621 |
|
|
|
100,571 |
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings/(loss) per common share |
$ |
1.33 |
|
|
$ |
(3.34 |
) |
|
$ |
2.50 |
|
|
$ |
(2.60 |
) |
Dividends per
common share |
$ |
0.49 |
|
|
$ |
0.45 |
|
|
$ |
0.94 |
|
|
$ |
0.90 |
|
FINANCIAL SEGMENT INFORMATION (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
July 3, 2022 |
|
July 4, 2021 |
|
July 3, 2022 |
|
July 4, 2021 |
Net sales |
|
|
|
|
|
|
|
|
Consumer Packaging |
$ |
989,982 |
|
|
$ |
597,804 |
|
|
$ |
1,858,081 |
|
|
$ |
1,180,556 |
|
|
Industrial Paper
Packaging |
|
727,402 |
|
|
|
608,531 |
|
|
|
1,426,529 |
|
|
|
1,173,929 |
|
|
All Other |
|
195,948 |
|
|
|
176,419 |
|
|
|
399,704 |
|
|
|
381,573 |
|
|
Consolidated |
$ |
1,913,332 |
|
|
$ |
1,382,754 |
|
|
$ |
3,684,314 |
|
|
$ |
2,736,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
profit: |
|
|
|
|
|
|
|
|
Consumer
Packaging |
$ |
139,421 |
|
|
$ |
65,296 |
|
|
$ |
313,030 |
|
|
$ |
146,656 |
|
|
Industrial Paper
Packaging |
|
94,201 |
|
|
|
59,818 |
|
|
|
166,862 |
|
|
|
112,117 |
|
|
All Other |
|
16,529 |
|
|
|
15,607 |
|
|
|
31,053 |
|
|
|
34,364 |
|
|
Restructuring/Asset impairment (charges) |
|
(10,563 |
) |
|
|
1,445 |
|
|
|
(22,705 |
) |
|
|
(5,401 |
) |
|
Amortization of
acquisition intangibles |
|
(20,871 |
) |
|
|
(12,111 |
) |
|
|
(39,671 |
) |
|
|
(24,860 |
) |
|
Other non-base
income/(charges), net |
|
(21,241 |
) |
|
|
5,236 |
|
|
|
(82,031 |
) |
|
|
(7,276 |
) |
|
Consolidated |
$ |
197,476 |
|
|
$ |
135,291 |
|
|
$ |
366,538 |
|
|
$ |
255,600 |
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) |
(Dollars in thousands) |
|
|
|
Six Months Ended |
|
July 3, 2022 |
|
July 4, 2021 |
|
|
|
|
Net Income / (Loss) |
$ |
247,374 |
|
|
$ |
(261,946 |
) |
Asset impairment
charges/losses on disposition of assets and divestitures of a
business |
|
9,035 |
|
|
|
7,089 |
|
Depreciation, depletion and
amortization |
|
145,952 |
|
|
|
121,792 |
|
Pension and postretirement
plan non-cash expense, net of (contributions) |
|
(26,017 |
) |
|
|
413,945 |
|
Changes in working
capital |
|
(258,479 |
) |
|
|
(45,595 |
) |
Changes in tax accounts |
|
39,104 |
|
|
|
(146,277 |
) |
Other operating activity |
|
27,496 |
|
|
|
12,945 |
|
Net cash provided by
operating activities |
$ |
184,465 |
|
|
$ |
101,953 |
|
|
|
|
|
Purchase of property, plant
and equipment, net |
|
(144,119 |
) |
|
|
(92,526 |
) |
Proceeds from divestiture of
business |
|
— |
|
|
|
86,071 |
|
Cost of acquisitions, net of
cash acquired |
|
(1,333,769 |
) |
|
|
(2,353 |
) |
Net debt borrowings /
(repayments) |
|
1,427,995 |
|
|
|
(112,864 |
) |
Excess cash costs of early
extinguishment of debt |
|
— |
|
|
|
(20,111 |
) |
Cash dividends paid |
|
(91,525 |
) |
|
|
(90,401 |
) |
Payments made to repurchase
shares |
|
(3,984 |
) |
|
|
(159,571 |
) |
Other, including effects of
exchange rates on cash |
|
(35,045 |
) |
|
|
(11,517 |
) |
|
|
|
|
Net increase / (decrease) in
cash and cash equivalents |
$ |
4,018 |
|
|
$ |
(301,319 |
) |
Cash and cash equivalents at
beginning of period |
|
170,978 |
|
|
|
564,848 |
|
Cash and cash equivalents at
end of period |
$ |
174,996 |
|
|
$ |
263,529 |
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(Dollars in thousands) |
|
|
|
July 3, 2022* |
|
December 31, 2021 |
Assets |
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
174,996 |
|
$ |
170,978 |
|
Trade accounts
receivable, net of allowances |
|
1,025,680 |
|
|
755,609 |
|
Other
receivables |
|
98,735 |
|
|
95,943 |
|
Inventories |
|
974,491 |
|
|
562,113 |
|
Prepaid
expenses |
|
102,582 |
|
|
74,034 |
|
|
|
$ |
2,376,484 |
|
$ |
1,658,677 |
Property, plant
and equipment, net |
|
1,628,818 |
|
|
1,297,500 |
Right of use
asset-operating leases |
|
296,643 |
|
|
268,390 |
Goodwill |
|
1,658,358 |
|
|
1,324,501 |
Other intangible
assets, net |
|
733,214 |
|
|
278,143 |
Other assets |
|
295,993 |
|
|
246,024 |
|
|
|
$ |
6,989,510 |
|
$ |
5,073,235 |
Liabilities and Shareholders’ Equity |
|
|
|
Current
Liabilities: |
|
|
|
|
Payable to
suppliers and other payables |
$ |
1,325,597 |
|
$ |
1,102,662 |
|
Notes payable and
current portion of long-term debt |
|
399,025 |
|
|
411,557 |
|
Income taxes
payable |
|
20,516 |
|
|
11,544 |
|
|
|
$ |
1,745,138 |
|
$ |
1,525,763 |
Long-term debt,
net of current portion |
|
2,727,916 |
|
|
1,199,106 |
Noncurrent
operating lease liabilities |
|
254,520 |
|
|
234,167 |
Pension and other
postretirement benefits |
|
153,807 |
|
|
158,265 |
Deferred income
taxes and other |
|
171,738 |
|
|
106,393 |
Total equity |
|
1,936,391 |
|
|
1,849,541 |
|
|
|
$ |
6,989,510 |
|
$ |
5,073,235 |
|
*Includes
preliminary purchase price accounting estimates related to the
Sonoco Metal Packaging acquisition that are subject to change |
Definition and Reconciliation of Non-GAAP
Financial MeasuresThe Company’s results determined in
accordance with U.S. generally accepted accounting principles
(GAAP) are referred to as “as reported” or "GAAP" results. The
Company uses certain financial performance measures, both
internally and externally, that are not in conformity with GAAP
(“non-GAAP financial measures") to assess and communicate the
financial performance of the Company. These non-GAAP financial
measures reflect the Company’s GAAP operating results adjusted to
remove amounts (including the associated tax effects) relating to:
restructuring initiatives; asset impairment charges;
acquisition/divestiture-related costs; gains or losses from the
divestiture of businesses; losses from the early extinguishment of
debt; non-operating pension costs; amortization expense on
acquisition intangibles; changes in LIFO inventory reserves;
certain income tax events and adjustments; and other items, if any.
The Company's management believes the exclusion of these items
improves the period-to-period comparability and analysis of the
underlying financial performance of the business. The adjusted
non-GAAP results are identified using the term “base,” for example,
“base earnings.” In addition, as discussed above, starting in 2022
and going forward, the Company includes adjustments in these
non-GAAP financial measures to add back amounts relating to
amortization-related expense on acquisition intangibles in order to
better align such measures with those of its peers, better reflect
the Company’s operating performance and increase the usefulness of
such measures to the investing community. In addition to “base”
results, the Company uses free cash flow, which 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. Net capital expenditures are defined as capital
expenditures minus proceeds from, and/or plus costs incurred in,
the disposition of capital assets
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 directly comparable GAAP financial measure. Whenever reviewing
a non-GAAP financial measure, investors are encouraged to fully
review and consider the related reconciliation as detailed below.
Third-quarter and full-year 2022 GAAP guidance or reconciliations
of guidance for non-GAAP financial measures to the nearest
comparable GAAP measures 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, amortization expense on
acquisition-related intangibles, 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.
|
For the three months ended July 3, 2022 |
Dollars in thousands,
except per share data |
GAAP |
Restructuring/AssetImpairments(1) |
Amortizationof Acquisition
Intangibles(2) |
Acquisition/DivestitureRelated(3) |
OtherAdjustments(4) |
Base |
Operating profit |
$ |
197,476 |
|
$ |
10,563 |
$ |
20,871 |
$ |
12,281 |
$ |
8,960 |
|
$ |
250,151 |
|
Non-operating pension costs |
|
1,677 |
|
|
— |
|
— |
|
— |
|
(1,677 |
) |
|
— |
|
Interest expense, net |
|
23,161 |
|
|
— |
|
— |
|
— |
|
136 |
|
|
23,297 |
|
Income before income taxes |
|
172,638 |
|
|
10,563 |
|
20,871 |
|
12,281 |
|
10,501 |
|
|
226,854 |
|
Provision for income taxes |
|
44,599 |
|
|
842 |
|
5,160 |
|
3,009 |
|
3,104 |
|
|
56,714 |
|
Income before equity in earnings
of affiliates |
|
128,039 |
|
|
9,721 |
|
15,711 |
|
9,272 |
|
7,397 |
|
|
170,140 |
|
Equity in earnings of affiliates,
net of tax |
|
3,728 |
|
|
— |
|
— |
|
— |
|
— |
|
|
3,728 |
|
Net income |
|
131,767 |
|
|
9,721 |
|
15,711 |
|
9,272 |
|
7,397 |
|
|
173,868 |
|
Net (income)/loss attributable to
noncontrolling interests |
|
(95 |
) |
|
39 |
|
— |
|
— |
|
— |
|
|
(56 |
) |
Net income attributable to
Sonoco |
|
131,672 |
|
|
9,760 |
|
15,711 |
|
9,272 |
|
7,397 |
|
|
173,812 |
|
Per diluted common share* |
$ |
1.33 |
|
$ |
0.10 |
$ |
0.16 |
$ |
0.09 |
$ |
0.07 |
|
$ |
1.76 |
|
*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 second quarter of
2022 the Company recognized additional asset impairment charges of
$3,452 related to the Company's decision to exit its operations in
Russia given the ongoing Russia-Ukraine conflict. |
(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 inventory "step-up" associated with purchase
accounting adjustments on acquisition transactions. The majority of
these charges relate to the final charges related to inventory
"step-up" associated with the January 2022 acquisition of Metal
Packaging. |
(4) Other
Adjustments include after-tax charges of $4,777 related to
increases in the Company's LIFO reserve, the remaining $2,620
after-tax net loss relates to certain derivative transactions and
non-operating pension charges. |
|
For the three months ended July 4, 2021 |
Dollars in thousands,
except per share data |
GAAP |
Restructuring/AssetImpairments(1) |
Amortizationof AcquisitionIntangibles |
Acquisition/DivestitureRelated |
OtherAdjustments(2) |
Base |
Operating profit |
$ |
135,291 |
|
$ |
(1,445 |
) |
$ |
12,111 |
$ |
1,462 |
$ |
(6,698 |
) |
$ |
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 |
|
1,462 |
|
566,330 |
|
|
123,762 |
(Benefit from)/Provision for
income taxes |
|
(118,151 |
) |
|
715 |
|
|
3,000 |
|
671 |
|
146,268 |
|
|
32,503 |
(Loss)/Income before equity in
earnings of affiliates |
|
(336,545 |
) |
|
(2,160 |
) |
|
9,111 |
|
791 |
|
420,062 |
|
|
91,259 |
Equity in earnings of affiliates,
net of tax |
|
2,306 |
|
|
— |
|
|
— |
|
— |
|
— |
|
|
2,306 |
Net (loss)/income |
|
(334,239 |
) |
|
(2,160 |
) |
|
9,111 |
|
791 |
|
420,062 |
|
|
93,565 |
Net loss attributable to
noncontrolling interests |
|
169 |
|
|
— |
|
|
— |
|
— |
|
— |
|
|
169 |
Net (loss)/income attributable to
Sonoco |
$ |
(334,070 |
) |
$ |
(2,160 |
) |
$ |
9,111 |
$ |
791 |
$ |
420,062 |
|
$ |
93,734 |
Diluted weighted average
common shares outstanding (3): |
|
100,082 |
|
|
|
|
|
543 |
|
|
100,625 |
Per diluted common share* |
$ |
(3.34 |
) |
$ |
(0.02 |
) |
$ |
0.09 |
$ |
0.01 |
$ |
4.17 |
|
$ |
0.93 |
*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 second quarter of
2021 gains totaling approximately $5,500 were recognized related to
the sale of previously closed facilities in the Company's tubes and
core business. These were partially offset by net restructuring and
asset impairment charges, mostly related to severance and asset
write-offs, totaling approximately $4,000 |
(2) Includes
non-operating pension costs, which include $547,000 of settlement
charges, losses from early extinguishment of debt, and costs
related to actual/potential acquisitions and divestitures,
partially offset by a foreign VAT refund, including applicable
interest, and a hedge gain related to a Euro-denominated loan
repayment. |
(3) Due to the
magnitude of Non-Base losses in the second quarter 2021, the
Company reported a GAAP Net Loss Attributable to Sonoco. In
instances where a company has a net loss, GAAP requires that the
company shall not consider any unexercised share awards or other
like instruments dilutive for purposes of calculating weighted
average shares outstanding. Accordingly, the Company did not
consider any unexercised share awards dilutive in calculating
weighted average shares outstanding for GAAP purposes in the table
above, which resulted in Basic Weighted Average 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 in the computation of Base Diluted
EPS, unexercised stock instruments that meet GAAP requirements for
dilution were considered dilutive to the same extent they would be
if GAAP Net Income Attributable to Sonoco were equal to Base Net
Income Attributable to Sonoco. |
|
For the six months ended July 3, 2022 |
Dollars in thousands,
except per share data |
GAAP |
Restructuring/AssetImpairments(1) |
Amortizationof Acquisition
Intangibles(2) |
Acquisition/DivestitureRelated(3) |
OtherAdjustments(4) |
Base |
Operating profit |
$ |
366,538 |
|
$ |
22,705 |
$ |
39,671 |
$ |
60,633 |
$ |
21,398 |
|
$ |
510,945 |
|
Non-operating pension costs |
|
3,002 |
|
|
— |
|
— |
|
— |
|
(3,002 |
) |
|
— |
|
Interest expense, net |
|
42,226 |
|
|
— |
|
— |
|
— |
|
136 |
|
|
42,362 |
|
Income before income taxes |
|
321,310 |
|
|
22,705 |
|
39,671 |
|
60,633 |
|
24,264 |
|
|
468,583 |
|
Provision for income taxes |
|
79,888 |
|
|
2,477 |
|
9,790 |
|
14,764 |
|
10,842 |
|
|
117,761 |
|
Income before equity in earnings
of affiliates |
|
241,422 |
|
|
20,228 |
|
29,881 |
|
45,869 |
|
13,422 |
|
|
350,822 |
|
Equity in earnings of affiliates,
net of tax |
|
5,952 |
|
|
— |
|
— |
|
— |
|
— |
|
|
5,952 |
|
Net income |
|
247,374 |
|
|
20,228 |
|
29,881 |
|
45,869 |
|
13,422 |
|
|
356,774 |
|
Net (income)/loss attributable to
noncontrolling interests |
|
(369 |
) |
|
100 |
|
— |
|
— |
|
— |
|
|
(269 |
) |
Net income attributable to
Sonoco |
|
247,005 |
|
|
20,328 |
|
29,881 |
|
45,869 |
|
13,422 |
|
|
356,505 |
|
Per diluted common share* |
$ |
2.50 |
|
$ |
0.21 |
$ |
0.30 |
$ |
0.47 |
$ |
0.14 |
|
$ |
3.61 |
|
*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 half of 2022
the Company recognized asset impairment charges of $9,165 related
to the Company's decision to exit its operations in Russia given
the ongoing Russia-Ukraine conflict. |
(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 inventory "step-up" associated with purchase
accounting adjustments on acquisition transactions. As described in
the body of the release, the majority of these charges relate to
inventory "step-up", valuation, consulting, and other transaction
costs associated with the January 2022 acquisition of Metal
Packaging. |
(4) Other
Adjustments include after-tax charges of $18,994 related to
increases in the Company's LIFO reserve, the remaining $5,572
after-tax net gain relates to certain derivative transactions and
discrete tax adjustments, which were partially offset by
non-operating pension charges. |
|
For the six months ended July 4, 2021 |
Dollars in thousands,
except per share data |
GAAP |
Restructuring/AssetImpairments(1) |
Amortizationof AcquisitionIntangibles |
AcquisitionRelated Costs |
OtherAdjustments(2) |
Base |
Operating profit |
$ |
255,600 |
|
$ |
5,401 |
$ |
24,860 |
$ |
11,488 |
$ |
(4,212 |
) |
$ |
293,137 |
Non-operating pension costs |
|
562,293 |
|
|
— |
|
— |
|
— |
|
(562,293 |
) |
|
— |
Interest expense, net |
|
32,525 |
|
|
— |
|
— |
|
— |
|
2,165 |
|
|
34,690 |
Loss from the early
extinguishment of debt |
|
20,184 |
|
|
— |
|
— |
|
— |
|
(20,184 |
) |
|
— |
(Loss)/Income before income
taxes |
|
(359,402 |
) |
|
5,401 |
|
24,860 |
|
11,488 |
|
576,100 |
|
|
258,447 |
(Benefit from)/Provision for
income taxes |
|
(94,106 |
) |
|
2,341 |
|
6,158 |
|
2,794 |
|
149,778 |
|
|
66,965 |
(Loss)/Income before equity in
earnings of affiliates |
|
(265,296 |
) |
|
3,060 |
|
18,702 |
|
8,694 |
|
426,322 |
|
|
191,482 |
Equity in earnings of affiliates,
net of tax |
|
3,350 |
|
|
— |
|
— |
|
— |
|
— |
|
|
3,350 |
Net (loss)/ income |
|
(261,946 |
) |
|
3,060 |
|
18,702 |
|
8,694 |
|
426,322 |
|
|
194,832 |
Net (income)/loss attributable to
noncontrolling interests |
|
172 |
|
|
— |
|
— |
|
— |
|
— |
|
|
172 |
Net (loss)/income attributable to
Sonoco |
$ |
(261,774 |
) |
$ |
3,060 |
$ |
18,702 |
$ |
8,694 |
$ |
426,322 |
|
$ |
195,004 |
Diluted weighted average
common shares outstanding (3): |
|
100,571 |
|
|
|
|
|
498 |
|
|
101,069 |
Per diluted common share* |
$ |
(2.60 |
) |
$ |
0.03 |
$ |
0.19 |
$ |
0.09 |
$ |
4.22 |
|
$ |
1.93 |
*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 six months
of 2021 restructuring and asset impairment charges, mostly related
to asset write-offs and severance, totaled approximately $10,900.
These were partially offset by gains totaling approximately $5,500
related to the sale of previously closed facilities in the
Company's tubes and core business. |
(2) Includes
non-operating pension costs, which include $547,000 of settlement
charges and losses from early extinguishment of debt. Additionally,
includes acquisition/divestiture-related costs, the loss on the
disposition of the Company's U.S. display and packaging business,
which were partially offset by a hedge gain related to a
Euro-denominated loan repayment, a foreign VAT refund, including
applicable interest, and life insurance gains. |
(3) Due to the
magnitude of Non-Base losses in the second quarter 2021, the
Company reported a GAAP Net Loss Attributable to Sonoco. In
instances where a company has a net loss, GAAP requires that the
company shall not consider any unexercised share awards or other
like instruments dilutive for purposes of calculating weighted
average shares outstanding. Accordingly, the Company did not
consider any unexercised share awards dilutive in calculating
weighted average shares outstanding for GAAP purposes in the table
above, which resulted in Basic Weighted Average 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 in the computation of Base Diluted
EPS, unexercised stock instruments that meet GAAP requirements for
dilution were considered dilutive to the same extent they would be
if GAAP Net Income Attributable to Sonoco were equal to Base Net
Income Attributable to Sonoco. |
|
Six Months Ended |
|
|
FREE CASH FLOW* |
July 3, 2022 |
|
July 4, 2021 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
184,465 |
|
|
$ |
101,953 |
|
|
|
|
Purchase of property, plant
and equipment, net |
$ |
(144,119 |
) |
|
$ |
(92,526 |
) |
|
|
|
Free Cash Flow |
$ |
40,346 |
|
|
$ |
9,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Estimated Low End |
|
Estimated High End |
|
Actual |
|
FREE CASH FLOW* |
December 31, 2022 |
|
December 31, 2022 |
|
December 31, 2021 |
|
Net cash provided by operating activities |
$ |
690,000 |
|
|
$ |
740,000 |
|
|
$ |
298,672 |
|
|
Add: Pension-settlement
-related contribution |
$ |
— |
|
|
$ |
— |
|
|
$ |
124,432 |
|
|
Net cash provided by operating
activities excluding 2021 pension-settlement-related
contribution |
$ |
690,000 |
|
|
$ |
740,000 |
|
|
$ |
423,104 |
|
|
Purchase of property, plant
and equipment, net |
|
(325,000 |
) |
|
|
(325,000 |
) |
|
$ |
(242,853 |
) |
|
Free Cash Flow excluding 2021
pension-settlement-related contribution |
$ |
365,000 |
|
|
$ |
415,000 |
|
|
$ |
180,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Free Cash Flow
is a non-GAAP measure that does not imply the amount of residual
cash flow available for discretionary expenditures, as both it and
net cash provided by operating activities do not include mandatory
debt service requirements and other non-discretionary expenditures.
Note that this is the Company's definition of this metric and may
not be comparable to similarly named metrics of other
organizations. |
Contact: Lisa Weeks 843-383-7524
lisa.weeks@sonoco.com
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