Sonoco reports record Q1 results
Global sustainable packaging company Sonoco has reported the financial results for its first quarter ended 3 April 2022.
The company reports $1.77 billion of net sales, compared with $1.35 billion in the same period in 2021, representing a new record for Sonoco.
Commenting on the company’s performance, Howard Coker, president and chief executive officer, said: “Our Sonoco team delivered exceptional top-line and bottom-line results during the first quarter which exceeded the high end of our recently increased guidance and were driven by record performances in our Consumer Packaging and Industrial Paper Packaging segments. We welcomed Ball Metalpack (Metal Packaging) to the Sonoco family on 26 January 2022, and were very pleased with their better-than-expected first-quarter results. In addition, we continue to make solid progress on our integration activities and look forward to the contributions the Metal Packaging team will make to the future success of Sonoco. Overall, the company’s first-quarter earnings benefited from strong price/cost recovery across most of our businesses, the addition of Metal Packaging and solid customer demand in our Consumer and All Other businesses. These positive factors were only partially offset by last year’s divestiture of the US display and packaging business and the impact of foreign currency translation.
“Our Consumer Packaging segment achieved record sales and operating profit grew over 113% versus the prior-year period due primarily to the earnings added by Metal Packaging, a positive price/cost relationship, productivity improvements and solid gains in volume/mix. Our Industrial Paper Packaging segment also produced record sales and operating profit, which improved almost 39% over the prior year period due primarily to positive price/cost recovery. Finally, despite strong volumes and solid price/cost results, the All Other group of businesses experienced a 23% decline in operating profit due mostly to the 2021 divestiture of the US display and packaging business.”
First Quarter Highlights
- First quarter 2022 net sales were a record $1.77 billion, compared with $1.35 billion in the same period in 2021.
- First quarter 2022 GAAP earnings per diluted share were $1.17, compared with $0.71 in the same period in 2021.
- First quarter 2022 GAAP earnings include net after-tax, non-base charges totaling $67.4 million, or $0.68per diluted share. These charges largely relate to the acquisition of Ball Metalpack, rebranded as Sonoco Metal Packaging, changes in the Last In, First Out (“LIFO”) inventory reserve, and the amortization expense of acquisition intangibles. In the first quarter of 2021, GAAP earnings included net after-tax, non-base charges of $29.0 million, or $0.29 per diluted share, as further described in the First Quarter Review.
- Base net income attributable to Sonoco (base earnings) for the first quarter 2022 was a record $1.85 per diluted share, compared with $1.00 per diluted share in the same period of 2021. 2021 base results throughout the release have been revised to conform with the Company’s current Base Earnings definition which excludes amortization of acquisition intangibles. The Company recently provided updated first quarter guidance of $1.70 to $1.80 per diluted share. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.)
- Cash flow from operations was $1.1 million in the first quarter of 2022, compared to $138.7 million in the same period of 2021. Free cash flow was a use of $66.3 million in the first quarter of 2022, compared with $99.4 million generated in the same period of 2021. (See free cash flow definition, explanation and reconciliation to cash flow from operations later in this release.)
2022 Second Quarter and Full-Year Guidance
- Second quarter base earnings are expected to be in a range of $1.20 to $1.30 per diluted share. Base earnings for the second quarter of 2021 were $0.93 per diluted share.
- The Company has updated its outlook for full-year base earnings to a range of $5.25 to $5.45 per diluted share. Full-year base earnings per diluted share in 2021 was $3.93.
- Full-year 2022 guidance for cash provided from operations is unchanged at a range of $690 million to $740 million and free cash flow guidance remains at $365 million to $415 million.
Note: Second-quarter and full-year 2022 GAAP guidance are not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast: restructuring costs and restructuring-related impairment charges, acquisition/divestiture-related costs, gains or losses on the sale of businesses or other assets, and the income tax effects of these items and/or other income tax-related events. These items could have a significant impact on the Company’s future GAAP financial results.
