Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today reported financial results for its fourth quarter and full year, both ending December 31, 2020.
Fourth-Quarter and Full-Year Highlights
Fourth-quarter 2020 GAAP loss per diluted share was $(0.12), compared with GAAP earnings per diluted share of $0.44 in 2019. Full-year 2020 GAAP earnings per diluted share were $2.05, compared to $2.88 in 2019.
2020 fourth-quarter results include net after-tax charges of $0.94 per diluted share. The main components of these charges were $0.56 related to non-cash asset impairments and $0.17 from the loss on the divestiture of the Company’s Europe contract packaging business. Additionally, the net charges include restructuring, non-operating pension and acquisition/divestiture costs. Prior-year results included net after-tax charges of $0.31 per diluted share mostly due to asset impairments, restructuring actions, non-operating pension costs and acquisition costs.
Base net income attributable to Sonoco (base earnings) for the quarter was $0.82 per diluted share, compared with $0.75 in 2019. Full-year 2020 base earnings per diluted share were $3.41, compared to $3.53 in 2019. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth-quarter and full-year 2020 base earnings guidance of $0.70 to $0.80 and $3.29 to $3.39 per diluted share, respectively.
Fourth-quarter 2020 net sales were $1.38 billion, up from $1.31 billion in 2019. Full-year 2020 net sales were $5.24 billion, compared to $5.37 billion in 2019.
Full-year cash flow from operations was $705.6 million in 2020, compared with $425.9 million in 2019. Free cash flow in 2020 was $349.3 million, compared with $74.3 million in 2019. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
On November 30, 2020, Sonoco sold its Europe contract packaging business, part of the Display and Packaging segment, for $120 million in cash, net of working capital and other adjustments.
Commenting on the Company’s full-year and fourth-quarter results, Sonoco President and Chief Executive Officer Howard Coker said, “2020 was both a test of our resolve as a Company and a testament to the strength of our people. Despite the impact of the pandemic-induced global recession, we quickly refocused operations on accelerating production of food packaging to meet consumers’ growing preference for at-home eating, while making adjustments in our industrial-related and protective packaging businesses in response to demand swings. We developed vitally needed temperature-assured packaging to begin shipping life-saving vaccines and therapeutic drugs to combat the spread of the coronavirus, and we further improved our portfolio by acquiring Can Packaging, a French designer and manufacturer of sustainable paper packaging and related equipment, while divesting our lower-margin Europe contract packaging business.
“In the fourth quarter, our businesses performed well as we exceeded the high end of our base earnings guidance and volume/mix drove a 4 percent improvement in sales growth. Some of this is the impact of two additional days in the current-year quarter, but a strong volume/mix improvement, nonetheless. Our Consumer Packaging segment achieved a 47 percent improvement in operating profit for the quarter, reflecting continued strong food packaging demand, while our Paper and Industrial Converted Products segment reported another sequential improvement in operating profit, although year-over-year results were off by 28 percent. In our Protective Solutions segment, we achieved a 42 percent improvement in operating profit driven by strong customer demand, while our Display and Packaging segment’s results were modestly lower due to the divestiture of our Europe contract packaging business. Overall, the Company’s bottom line results benefited from strong productivity and positive sales volume/mix. These positive factors were partially offset by a negative price/cost relationship, stemming from higher year-over-year recovered paper costs which primarily impacted our Paper and Industrial Converted Products segment, and increased interest expense.
“Finally, we achieved record cash flow from operations and free cash flow in 2020 reflecting our solid earnings performance and disciplined focus on managing working capital. Sonoco maintains a strong liquidity position and repaid $442 million of debt during the fourth quarter to further support our investment-grade credit rating. Our strong cash flow and balance sheet provide us the flexibility to invest in growing our business both organically and through acquisitions while continuing to return cash to our shareholders through dividends, including our recently announced 4.7 percent increase.”
Net sales for the fourth quarter were $1.4 billion, an increase of $67.5 million, or 5.2 percent, from last year’s quarter. Sales grew during the quarter due to strong volume gains, higher selling prices and acquisition sales net of divestitures. Because of the Company’s accounting calendar, the fourth quarter of 2020 included two additional days when compared to the prior year quarter.
The GAAP net loss attributable to Sonoco in the fourth quarter was $(11.6) million, or $(0.12) per diluted share, a decrease of $56.5 million, compared with GAAP net income of $44.9 million, or $0.44 per diluted share, in 2019. Base earnings in the fourth quarter were $83.0 million, or $0.82 per diluted share, an increase of $6.6 million, compared with $76.4 million, or $0.75 per diluted share, in 2019.
details at: https://investor.sonoco.com/news-releases/news-release-details/sonoco-reports-fourth-quarter-and-full-year-2020-results