02.18.19
Sonoco reported financial results for its fourth quarter and full year, both ending Dec. 31, 2018.
Fourth-quarter 2018 GAAP earnings per diluted share were $0.77, compared with $0.06 in 2017. Prior-year results included a net after-tax charge of $0.67 per diluted share mostly due to the impact of the 2017 U.S. Tax Cuts and Jobs Act, as well as restructuring expenses, acquisition costs and other one-time items.
Full-year 2018 GAAP earnings per diluted share were $3.10, compared to $1.74 in 2017. Sonoco previously provided GAAP earnings guidance of $0.75 to $0.85 and $3.09 to $3.19 per diluted share for the fourth quarter and full year, respectively.
Fourth-quarter 2018 net sales grew to $1.36 billion, up 4.4%, from $1.30 billion in 2017. Full-year 2018 net sales grew 7% to a record $5.39 billion, compared to $5.04 billion in 2017.
Full-year cash flow from operations was $589.9 million for 2018, compared with $348.3 million in 2017. Free cash flow was $260.2 million, compared with $11.5 million in 2017.
During the fourth quarter, Sonoco purchased the remaining 70% interest in the Conitex Sonoco joint venture, as well as a previously unowned composite can operation in Spain from Texpack, Inc., for total consideration of approximately $145 million. Also, Sonoco acquired an additional 19% interest in its Sonoco Asia, LLC, joint venture from PFE Hong Kong Limited for $35 million. This increased Sonoco’s ownership of Sonoco Asia, LLC to approximately 99%.
Full-year 2019 operating cash flow and free cash flow are expected to be in a range of $600 million to $620 million and $225 million and $245 million, respectively.
“Despite hurricanes, accelerating inflation, tariffs and disappointing performance in our Consumer Packaging segment, Sonoco produced record top-line, bottom-line, and cash flow results in 2018. This performance demonstrates how our strong, diversified business mix has allowed us to produce consistent earnings improvement over the past several years,” Rob Tiede, Sonoco president and CEO.
“In the fourth quarter, net sales grew approximately 4.4% and bottom-line results (base net income attributable to Sonoco) improved by more than 15.4% compared to last year,” Tiede added. “However, results for the fourth quarter were choppy as a strong performance in our Paper and Industrial Converted Products, and Display and Packaging segments were offset by a disappointing performance in the Consumer Packaging segment. Overall, earnings in the fourth quarter benefited from a positive price/cost relationship, acquisitions and a lower effective tax rate compared to the prior year, which was partially offset by negative productivity, higher operating costs and lower volume/mix.”
Net sales for the fourth quarter were $1.4 billion, an increase of $56.6 million, or 4.4%, from last year’s quarter. The improvement reflects sales added by acquisitions and higher selling prices implemented to recover rising raw material, freight and other operating costs, which were partially offset by the negative impact of foreign exchange and lower volume primarily in the Consumer Packaging and Paper and Industrial Converted Products segments.
Gross profits were $254.3 million in the fourth quarter, an increase of $9.9 million or 4%, compared with $244.4 million in the same period in 2017. Gross profit as a percentage of sales was essentially flat at 18.8%.
Fourth-quarter 2018 GAAP earnings per diluted share were $0.77, compared with $0.06 in 2017. Prior-year results included a net after-tax charge of $0.67 per diluted share mostly due to the impact of the 2017 U.S. Tax Cuts and Jobs Act, as well as restructuring expenses, acquisition costs and other one-time items.
Full-year 2018 GAAP earnings per diluted share were $3.10, compared to $1.74 in 2017. Sonoco previously provided GAAP earnings guidance of $0.75 to $0.85 and $3.09 to $3.19 per diluted share for the fourth quarter and full year, respectively.
Fourth-quarter 2018 net sales grew to $1.36 billion, up 4.4%, from $1.30 billion in 2017. Full-year 2018 net sales grew 7% to a record $5.39 billion, compared to $5.04 billion in 2017.
Full-year cash flow from operations was $589.9 million for 2018, compared with $348.3 million in 2017. Free cash flow was $260.2 million, compared with $11.5 million in 2017.
During the fourth quarter, Sonoco purchased the remaining 70% interest in the Conitex Sonoco joint venture, as well as a previously unowned composite can operation in Spain from Texpack, Inc., for total consideration of approximately $145 million. Also, Sonoco acquired an additional 19% interest in its Sonoco Asia, LLC, joint venture from PFE Hong Kong Limited for $35 million. This increased Sonoco’s ownership of Sonoco Asia, LLC to approximately 99%.
Full-year 2019 operating cash flow and free cash flow are expected to be in a range of $600 million to $620 million and $225 million and $245 million, respectively.
“Despite hurricanes, accelerating inflation, tariffs and disappointing performance in our Consumer Packaging segment, Sonoco produced record top-line, bottom-line, and cash flow results in 2018. This performance demonstrates how our strong, diversified business mix has allowed us to produce consistent earnings improvement over the past several years,” Rob Tiede, Sonoco president and CEO.
“In the fourth quarter, net sales grew approximately 4.4% and bottom-line results (base net income attributable to Sonoco) improved by more than 15.4% compared to last year,” Tiede added. “However, results for the fourth quarter were choppy as a strong performance in our Paper and Industrial Converted Products, and Display and Packaging segments were offset by a disappointing performance in the Consumer Packaging segment. Overall, earnings in the fourth quarter benefited from a positive price/cost relationship, acquisitions and a lower effective tax rate compared to the prior year, which was partially offset by negative productivity, higher operating costs and lower volume/mix.”
Net sales for the fourth quarter were $1.4 billion, an increase of $56.6 million, or 4.4%, from last year’s quarter. The improvement reflects sales added by acquisitions and higher selling prices implemented to recover rising raw material, freight and other operating costs, which were partially offset by the negative impact of foreign exchange and lower volume primarily in the Consumer Packaging and Paper and Industrial Converted Products segments.
Gross profits were $254.3 million in the fourth quarter, an increase of $9.9 million or 4%, compared with $244.4 million in the same period in 2017. Gross profit as a percentage of sales was essentially flat at 18.8%.