Sonoco Reports Fourth-Quarter and Full-Year 2021 Results

Sonoco (NYSE: SON), one of the largest sustainable global packaging companies, today reported financial results for its fourth quarter and full year, both ending December 31, 2021.

Fourth-Quarter and Full-Year Highlights
•Fourth-quarter 2021 net sales were $1.44 billion, up from $1.38 billion in 2020. Full-year 2021 net sales were $5.59 billion, compared to $5.24 billion in 2020.
•Fourth-quarter 2021 GAAP earnings per diluted share was $0.66, compared with a GAAP loss per diluted share of $(0.12) in 2020. The full-year 2021 GAAP loss per diluted share was $(0.86), compared to GAAP earnings per diluted share of $2.05 in 2020. The full-year 2021 GAAP loss was driven by $410.4 million after-tax pension settlement charges mostly related to the Company’s settlement of its U.S. Inactive Plan in the second quarter.
•2021 fourth-quarter results include net after-tax charges of $0.24 per diluted share related to restructuring charges, acquisition-related activity, non-operating pension costs, and other non-base items. Prior-year results included net after-tax charges of $0.56 per diluted share primarily related to non-cash asset impairments, $0.17 per diluted share from the loss on the divestiture of the Company’s European contract packaging business and charges from restructuring, non-operating pension and acquisition/divestiture costs.
•Base net income attributable to Sonoco (base earnings) for the quarter was $0.90 per diluted share, compared with $0.82 in 2020. Full-year 2021 base earnings per diluted share were $3.55, compared to $3.41 in 2020. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth-quarter and full-year 2021 base earnings guidance of $0.84 to $0.90 and $3.49 to $3.55 per diluted share, respectively.
•Full-year cash flow from operations was $298.7 million in 2021, compared with $705.6 million in 2020. Free cash flow in 2021 was $55.8 million, compared with $524.5 million in 2020. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
•On January 26, 2022, Sonoco completed the acquisition of Ball Metalpack, a leading manufacturer of sustainable steel tinplate packaging for food and household products and the largest aerosol can producer in North America, for $1.35 billion in cash subject to customary adjustments, including for working capital, cash, and indebtedness.

Full-Year and First Quarter 2022 Guidance Updates
•Full-year 2022 base earnings are expected to be in the range of $4.60 to $4.80 per diluted share, including the projected earnings benefit from the addition of Ball Metalpack. Effective with the first quarter of 2022, the Company has modified its definition of base earnings to exclude amortization expense on acquisition intangibles. This change was made to better align the Company’s definition of base earnings with those of its peers. Full-year 2021 base earnings per diluted share would have been $3.93 after adding back amortization expense on intangibles from acquisitions.
•Base earnings for the first quarter of 2022 are estimated to be in the range of $1.25 to $1.35 per diluted share. Base earnings per diluted share for the first quarter of 2021 would have been $1.00 after adding back amortization expense on acquisition intangibles.
•Full-year 2022 cash flow from operations and free cash flow are expected to be between $690 million to $740 million and $365 million to $415 million, respectively. This updated guidance reflects the expected benefit from the Ball Metalpack acquisition.

CEO Comments
Commenting on the Company’s full-year and fourth-quarter results, Sonoco President and Chief Executive Officer Howard Coker said, “As I look back at all we accomplished in 2021, I couldn’t be more proud of how our Sonoco team worked together to produce solid results despite unprecedented headwinds from storms, supply chain disruptions, inflation and the continuing effects of Covid-19. We aggressively drove price increases across all our businesses to counter higher raw material and non-material inflation. We increased capital spending to fund more high-return projects, including Project Horizon which is modernizing our Hartsville uncoated recycled paperboard complex. We better focused our sustainability efforts, including setting aggressive science-based targets to meaningfully reduce greenhouse gas emissions over the next decade. We simplified our portfolio by exiting the display and packaging business and recently added Ball Metalpack, which further expands our sustainable consumer packaging offering while being immediately accretive to base earnings and cash flow. Finally, we returned a record $397 million in cash to shareholders through dividends and share repurchases.

“In the fourth quarter, our balanced mix of Consumer and Industrial packaging businesses performed well as we achieved results at the high end of our base earnings guidance despite facing market disruptions and continued cost pressures. Overall, our bottom-line results benefited from strong productivity, an overall positive price/cost relationship, and a lower effective tax rate. These positive factors were partially offset by the impact of four fewer shipping days compared to last year’s fourth quarter and the divestiture of the display and packaging business. Our Industrial Paper Packaging segment achieved a sixth consecutive quarter of sales growth while operating profit increased by almost 33 percent as demand and price realization continued to improve. Our Consumer Packaging segment operating profit declined 14 percent from the prior-year quarter reflecting a normalization of demand from the heightened eat-at-home trends experienced last year and the impact of higher costs. Finally, our All Other group of businesses, which includes industrial plastics, protective and retail security packaging, and health care packaging, reported a 34.5 percent decline in operating profit primarily stemming from the display and packaging divestiture.”
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