10.16.14
Sonoco reported financial results for its third quarter, ending Sept. 28, 2014. Third quarter 2014 GAAP earnings per diluted share were $0.69, compared with $0.59 in 2013. Base net income attributable to Sonoco (base earnings) for third quarter 2014 was a record $0.72 per diluted share, compared with $0.63 in 2013.
Third quarter 2014 net sales were $1.26 billion up approximately 3% from $1.23 billion in 2013. Gross profit was $228 million in the third quarter, up 2%, compared with $224 million in the same period in 2013. Cash flow from operations for the third quarter was $158 million, compared with $177 million in 2013.
Base earnings for the fourth quarter of 2014 are estimated to be in the range of $0.59 to $0.64 per diluted share. Base earnings in the fourth quarter of 2013 were $0.58 per diluted share. The 2014 free cash flow projection is unchanged at approximately $110 million.
“Our strategy to grow and optimize our balanced portfolio of businesses continued to gain traction in the quarter as consolidated sales and base earnings reached record levels when including the benefits from a legal settlement and lower than anticipated taxes,” said Jack Sanders, president and CEO. “Excluding those favorable items, our businesses performed relatively well in the quarter as they benefitted from a positive price/cost relationship, modest improvements in manufacturing productivity and lower pension expense. Volume across most of our businesses was higher in the quarter, but earnings were partially impacted by a negative mix of business along with higher labor, maintenance and other operating costs.
“Our Paper and Industrial Converted Products segment turned in another strong quarter, with operating profits gaining 30% over the prior year as operating margins hit their highest level in 12 years,” Sanders added. “The increase was due to a positive price/cost relationship, proceeds received on the settlement of a lawsuit, productivity improvements and lower pension expense, which were partially offset by higher labor, maintenance and other operating costs. Segment volume declined slightly during the quarter due primarily to lower volume in corrugated paper and steel reels, although the impact was partially offset by a favorable mix of business. In our Protective Solutions segment, operating profits declined 7% due to higher manufacturing and other operating costs and a negative price/cost relationship, somewhat offset by higher volume and favorable changes in the mix of products sold.
“Operating profits in our Consumer Packaging segment showed a slight improvement over the prior year’s quarter as higher volume, lower pension expense and a modestly positive price/cost relationship was nearly offset by a negative mix of business and higher labor, maintenance and other operating costs,” Sanders noted. “The higher volume in the quarter reflects gains in metal ends, blowmolded plastics and flexible packaging, partially offset by lower demand for domestic composite cans. Productivity for the segment was essentially unchanged year-over-year despite continued negative productivity in our flexible packaging operations. Operating profits in our Display and Packaging segment declined 7% due to a negative mix of business and higher labor, maintenance and other operating costs. Gains from manufacturing productivity partially offset these negative factors.”
Sonoco received approval from the German Federal Cartel Office on Sept. 30, 2014 to close its acquisition of Weidenhammer Packaging Group for approximately €286 million by Nov. 1, 2014
For the first nine months of 2014, net sales were $3.7 billion, up 2%, compared with $3.6 billion in the same period in 2013. The increase was due to higher selling prices, increased volumes, and acquisitions, partially offset by the negative impact of foreign exchange.
Net income attributable to Sonoco for the first nine months of 2014 was $184.7 million, or $1.79 per diluted share, up 12%, from $164.4 million, or $1.59 per diluted share, in the same period in 2013. Earnings in the first nine months of 2014 were negatively impacted by after-tax charges of $9.2 million, or $0.08 per diluted share, stemming from restructuring costs, asset impairment charges, acquisition expenses and non-base income tax charges. During the same period in 2013, earnings were negatively impacted by $13.2 million, or $0.13 per diluted share, of restructuring and other related charges.
Base earnings for the first nine months were $193.9 million, or $1.87 per diluted share, compared with $177.6 million, or $1.72 per diluted share for the same period in 2013. The 9% increase in base earnings stemmed from a positive price/cost relationship, productivity improvements, proceeds from a legal settlement, volume growth, acquisitions and lower pension expense. These favorable factors were partially offset by higher labor, maintenance and other operating costs and unfavorable changes in the mix of products sold.
Current year-to-date gross profit was $672 million, up 3%, compared with $652 million in the same period of 2013. Gross profit as a percentage of sales was 18.2%, compared with 18.0% for the same period in 2013. For the first nine months of 2014, cash generated from operations was $267 million, compared with $421 million in the same period in 2013.
At Sept. 28, 2014, total debt was approximately $1.0 billion, compared with $981 million at Dec. 31, 2013.
Commenting on the company’s outlook, Sanders said, “We are extremely excited about the expected completion of the Weidenhammer acquisition in the fourth quarter. We look forward to working with Weidenhammer’s leadership team and its 1,100 associates to generate positive earnings accretion in 2015, while continuing to grow our global composite can business to our combined customers’ needs going forward.
“While we remain optimistic that the U.S. economy will continue its positive improvement trend through the fourth quarter, we do not expect any notable improvement in consumer demand for packaged food,” he added. “In addition, we remain cautious about the near-term state of economic conditions in Europe and some emerging markets. That said, we are working closely with our customers on new growth projects, several of which should add to sales and earnings in 2015. We are also developing new strategies to optimize our supply chain, improve productivity and reduce organizational costs in an effort to continue to improve margins and returns.”
Third quarter 2014 net sales were $1.26 billion up approximately 3% from $1.23 billion in 2013. Gross profit was $228 million in the third quarter, up 2%, compared with $224 million in the same period in 2013. Cash flow from operations for the third quarter was $158 million, compared with $177 million in 2013.
Base earnings for the fourth quarter of 2014 are estimated to be in the range of $0.59 to $0.64 per diluted share. Base earnings in the fourth quarter of 2013 were $0.58 per diluted share. The 2014 free cash flow projection is unchanged at approximately $110 million.
“Our strategy to grow and optimize our balanced portfolio of businesses continued to gain traction in the quarter as consolidated sales and base earnings reached record levels when including the benefits from a legal settlement and lower than anticipated taxes,” said Jack Sanders, president and CEO. “Excluding those favorable items, our businesses performed relatively well in the quarter as they benefitted from a positive price/cost relationship, modest improvements in manufacturing productivity and lower pension expense. Volume across most of our businesses was higher in the quarter, but earnings were partially impacted by a negative mix of business along with higher labor, maintenance and other operating costs.
“Our Paper and Industrial Converted Products segment turned in another strong quarter, with operating profits gaining 30% over the prior year as operating margins hit their highest level in 12 years,” Sanders added. “The increase was due to a positive price/cost relationship, proceeds received on the settlement of a lawsuit, productivity improvements and lower pension expense, which were partially offset by higher labor, maintenance and other operating costs. Segment volume declined slightly during the quarter due primarily to lower volume in corrugated paper and steel reels, although the impact was partially offset by a favorable mix of business. In our Protective Solutions segment, operating profits declined 7% due to higher manufacturing and other operating costs and a negative price/cost relationship, somewhat offset by higher volume and favorable changes in the mix of products sold.
“Operating profits in our Consumer Packaging segment showed a slight improvement over the prior year’s quarter as higher volume, lower pension expense and a modestly positive price/cost relationship was nearly offset by a negative mix of business and higher labor, maintenance and other operating costs,” Sanders noted. “The higher volume in the quarter reflects gains in metal ends, blowmolded plastics and flexible packaging, partially offset by lower demand for domestic composite cans. Productivity for the segment was essentially unchanged year-over-year despite continued negative productivity in our flexible packaging operations. Operating profits in our Display and Packaging segment declined 7% due to a negative mix of business and higher labor, maintenance and other operating costs. Gains from manufacturing productivity partially offset these negative factors.”
Sonoco received approval from the German Federal Cartel Office on Sept. 30, 2014 to close its acquisition of Weidenhammer Packaging Group for approximately €286 million by Nov. 1, 2014
For the first nine months of 2014, net sales were $3.7 billion, up 2%, compared with $3.6 billion in the same period in 2013. The increase was due to higher selling prices, increased volumes, and acquisitions, partially offset by the negative impact of foreign exchange.
Net income attributable to Sonoco for the first nine months of 2014 was $184.7 million, or $1.79 per diluted share, up 12%, from $164.4 million, or $1.59 per diluted share, in the same period in 2013. Earnings in the first nine months of 2014 were negatively impacted by after-tax charges of $9.2 million, or $0.08 per diluted share, stemming from restructuring costs, asset impairment charges, acquisition expenses and non-base income tax charges. During the same period in 2013, earnings were negatively impacted by $13.2 million, or $0.13 per diluted share, of restructuring and other related charges.
Base earnings for the first nine months were $193.9 million, or $1.87 per diluted share, compared with $177.6 million, or $1.72 per diluted share for the same period in 2013. The 9% increase in base earnings stemmed from a positive price/cost relationship, productivity improvements, proceeds from a legal settlement, volume growth, acquisitions and lower pension expense. These favorable factors were partially offset by higher labor, maintenance and other operating costs and unfavorable changes in the mix of products sold.
Current year-to-date gross profit was $672 million, up 3%, compared with $652 million in the same period of 2013. Gross profit as a percentage of sales was 18.2%, compared with 18.0% for the same period in 2013. For the first nine months of 2014, cash generated from operations was $267 million, compared with $421 million in the same period in 2013.
At Sept. 28, 2014, total debt was approximately $1.0 billion, compared with $981 million at Dec. 31, 2013.
Commenting on the company’s outlook, Sanders said, “We are extremely excited about the expected completion of the Weidenhammer acquisition in the fourth quarter. We look forward to working with Weidenhammer’s leadership team and its 1,100 associates to generate positive earnings accretion in 2015, while continuing to grow our global composite can business to our combined customers’ needs going forward.
“While we remain optimistic that the U.S. economy will continue its positive improvement trend through the fourth quarter, we do not expect any notable improvement in consumer demand for packaged food,” he added. “In addition, we remain cautious about the near-term state of economic conditions in Europe and some emerging markets. That said, we are working closely with our customers on new growth projects, several of which should add to sales and earnings in 2015. We are also developing new strategies to optimize our supply chain, improve productivity and reduce organizational costs in an effort to continue to improve margins and returns.”