First-quarter 2020 net sales were $1.30 billion, down 3.6% compared with $1.35 billion in 2019. The sales decline was driven by lower volume/mix, reduced selling prices and a stronger US dollar. These negative impacts were somewhat offset by increased sales from acquisitions.
Gross profit was $266.6 million in the first quarter compared to $270.1 million in the same period in 2019. Gross profit as a percentage of sales was 20.5%, an improvement from 20% in the same period in 2019.
Cash flow from operations was $87.7 million in the first three months of 2020, compared with $92.3 million in 2019. Free cash flow was $13.7 million, compared with $9.5 million in the first three months of 2019.
First-quarter 2020 GAAP earnings per diluted share were $0.80, compared with $0.73 in 2019.
Sonoco has withdrawn its full-year 2020 guidance for base earnings, cash flow from operations and free cash flow due to the unknown severity and duration of the COVID-19 pandemic and the related lack of visibility to the impact on the company's served markets.
The company is providing second-quarter base earnings guidance of $0.73 to $0.83, compared to $0.95 per diluted share in the second quarter of 2019. The company's wide guidance range reflects uncertainties regarding challenging macroeconomic conditions stemming from the pandemic.
“I could not be more proud of the heroic efforts our associates are making every day to meet the critical needs of our customers during a period of unprecedented disruption and uncertainty,” said Howard Coker, president and CEO. “By focusing daily on controlling what is vitally important, including the health and safety of our people, the quality of our products, productivity improvements and cost management, Sonoco was able to report strong bottom-line results in the first quarter with GAAP earnings up 9.2% from last year and base earnings up 10.6%, exceeding the high-end of our base earnings guidance.
“Although we saw strong results in March across many of our businesses, which we believe was largely attributable to consumers spending more time at home as a result of COVID-19, the pandemic’s impact has clearly started to weigh on certain of our served markets,” added Coker. “We expect that weaker demand due to COVID-19 in certain parts of our business, along with unprecedented increases in recycled fiber costs, will have a significant negative impact on our second-quarter results.”
As of March 29, 2020, total debt was approximately $1.64 billion, compared with $1.68 billion as of Dec. 31, 2019. The company's total-debt-to-total-capital ratio was 48.3% as of March 29, 2020, compared to 48.1% at the end of 2019.
“The only thing certain about the rest of 2020 is there will be tremendous uncertainty,” Coker concluded. “After a strong first quarter, we are projecting a difficult second quarter as the pandemic is expected to continue impacting the vast majority of the US, and most of the world, resulting in rising unemployment and market disruption. That said, we expect our consumer-related businesses to continue performing well in the second quarter as food consumption trends should continue to be driven by stay-at-home consumers.
“Approximately 80% of our Consumer Packaging segment sales come from food packaging, where we are already seeing increased orders in many of our served markets,” he added. “In addition, we expect our paperboard operations in North America to be relatively steady as increased demand for board serving the tissue and towel market should help offset declines from some of our industrial converted products businesses.”