Asia Pulp & Paper (APP) continues to expand its portfolio to meet the environmentally conscious goals and demands of consumers with the newest addition to the Foopak suite of products: the new Bio Container for takeaway food.Constructed with folding boxboard (FBB), the box offers a fully biodegradable and compostable solution for takeaway containers, trays and other direct food contact items. The highly durable paper stock capable of breaking down naturally in 12 weeksmakes the boxboard an ideal alternative to commonly used plastic boxes. The Bio Container’s double coating has an outside layer that is ideal for branding and promotions with a whitesurface that is excellent for multi-color lithography, letter press and flexography. The inside layerprovides a level 9 grease resistance, designed to protect against water and grease absorption to promote reduced food leakage. Formulated for high-speed bar heat-sealing at 80C/356F for converting and finishing and hot gluing applications. The box is suitable for both microwave and freezer use.
Sonoco (NYSE: SON), one of the most sustainable, diversified global packaging companies, today reported financial results for its fourth quarter and full year, both ending December 31, 2019.
Fourth-Quarter and Full-Year Highlights
Fourth-quarter 2019 GAAP earnings per diluted share were $0.44, compared with $0.77 in 2018.
2019 fourth-quarter results include net after-tax charges of $0.31 per diluted share, primarily related to asset impairments, restructuring actions, non-operating pension costs and acquisition-related expenses. Prior-year results included net after-tax charges of $0.07 per diluted share mostly due to restructuring expenses, acquisition costs and other one-time items which were partially offset by a gain related to the impact of the 2017 U.S. Tax Cuts and Jobs Act.
Full-year 2019 GAAP earnings per diluted share were $2.88, compared to $3.10 in 2018. Sonoco previously provided fourth-quarter and full-year 2019 GAAP earnings guidance of $0.43 to $0.45 and $2.87 to $2.89 per diluted share, respectively.
Base net income attributable to Sonoco (base earnings) for the quarter was $0.75 per diluted share, compared with $0.84 in 2018. Full-year 2019 base earnings per diluted share were $3.53, compared to $3.37 in 2018. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth-quarter and full-year 2019 base earnings guidance of $0.74 to $0.76 and $3.52 to $3.54 per diluted share, respectively.
Fourth-quarter 2019 net sales were $1.31 billion, down from $1.36 billion in 2018. Full-year 2019 net sales were $5.37 billion, compared to $5.39 billion in 2018.
Full-year cash flow from operations was $425.9 million for 2019, compared with $589.9 million in 2018. Free cash flow was $74.3 million, compared with $260.2 million in 2018. 2019 cash flow results included a voluntary contribution into the Company’s U.S. defined benefit pension plan of approximately$165 million, after taxes. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
On December 31, 2019, Sonoco purchased Thermoformed Engineered Quality LLC, and Plastique Holdings, LTD, (together TEQ), a global manufacturer of thermoformed packaging serving healthcare, medical device and consumer markets, from ESCO Technologies, Inc. (NYSE: ESE) for $187 million in cash.
First-Quarter and Full-Year 2020 Guidance
Base earnings for the first quarter of 2020 are estimated to be in the range of $0.83 to $0.89 per diluted share, compared to $0.85 per diluted share in the first quarter of 2019.
Full-year 2020 base earnings are expected to be $3.60 to $3.70 per diluted share, an adjustment from the Company’s previously communicated 2020 guidance of $3.65 to $3.75.
Full-year 2020 cash flow from operations and free cash flow guidance remain unchanged and are expected to be between $625 million to $645 million and $250 million to $270 million, respectively.
Note: First-quarter and full-year 2020 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, asset impairment charges, acquisition-related costs, certain income tax related events and other items. These items could have a significant impact on the Company’s future GAAP financial results.
Commenting on the Company’s full-year and fourth-quarter results, Sonoco President and Chief Executive Officer Howard Coker said, “We were extremely pleased how the Sonoco team managed our diverse industrial- and consumer-related businesses through challenging market conditions to achieve solid results in 2019. In addition, we continued to improve our portfolio with the acquisition of Corenso Holdings North America, which strengthened our domestic paperboard operations, and we expanded our offerings into the growing healthcare market with the year-end addition of TEQ. Finally, we launched our EnviroSenseTM portfolio of sustainable packaging solutions that will help our customers further reduce the environmental impact of packaging.
“While we achieved slightly better than the mid-point of our base earnings guidance in the fourth quarter, our bottom-line results faced a difficult comparison to last year due primarily to a lower effective tax rate and hurricane-related business interruption insurance proceeds. Overall, earnings in the fourth quarter of 2019 benefited from solid productivity improvements and acquisitions, which were more than offset by lower volume/mix, a negative price/cost relationship, the negative impact of foreign exchange and reduced income from equity in affiliates.
“Our Consumer Packaging segment’s operating profit improved 6.6 percent as strong earnings in paperboard containers and improved results in flexible packaging were partially offset by weak results in rigid plastics. The segment benefited from a positive price/cost relationship and productivity improvements, which were partially offset by lower volume/mix and higher operating costs. Our Paper and Industrial Converted Products segment experienced a 10.5 percent decline in operating profit over the prior year’s quarter as strong improvements in productivity and earnings from the Corenso acquisition were more than offset by a negative price/cost relationship, lower volume/mix and the impact of the prior year’s business interruption insurance proceeds.”
“Operating profit in our Protective Solutions segment improved as strong temperature-assured packaging volume along with segment-wide productivity improvements were partially offset by weak molded foam and fiber packaging results. Finally, our Display and Packaging segment saw a decline in operating profit in the quarter as continued solid results in international contract packaging and domestic display and packaging activity were more than offset by a decline in retail security volume/mix.”
Net sales for the fourth quarter were $1.3 billion, a decline of $46.8 million, or 3.4 percent, from last year’s quarter. Sales declined due to lower volumes in each segment along with lower selling prices in our Paper and Industrial Converted Products Segment and the negative impact of foreign exchange, which was only partially offset by sales added by the Corenso acquisition.
GAAP net income attributable to Sonoco in the fourth quarter was $44.9 million, or $0.44 per diluted share, a decrease of $32.8 million, compared with $77.7 million, or $0.77 per diluted share, in 2018. Base earnings in the fourth quarter were $76.4 million, or $0.75 per diluted share, a decrease of $8.9 million, compared with $85.3 million, or $0.84 per diluted share, in 2018. Base earnings and base earnings per diluted share are non-GAAP financial measures adjusted to remove restructuring-related items, asset impairment charges, acquisition expenses, non-operating pension costs, 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.)
Fourth-quarter GAAP earnings include after-tax charges of $31.5 million, or $0.31 per diluted share, due primarily to asset impairments, restructuring actions, non-operating pension costs and acquisition expenses. In the fourth quarter of 2018, GAAP earnings included charges totaling $7.6 million or $0.07 per diluted share, after tax, related to restructuring activities, acquisitions and other items which were partially offset by non-base gains related to the 2017 U.S. Tax Cuts and Jobs Act.
Gross profits were $246.9 million in the fourth quarter, a decline of $7.4 million or 2.9 percent, compared with $254.3 million in the same period in 2018. Gross profit as a percentage of sales was essentially flat at 18.9 percent. Fourth-quarter GAAP selling, general and administrative expenses decreased $13.1 million from the prior year to $135.8 million. This decrease was largely driven by lower acquisition related costs in 2019 as well as cost controls implemented this year.
more detail at: https://investor.sonoco.com/news-releases/news-release-details/sonoco-reports-fourth-quarter-and-full-year-2019-results