Sonoco Sees Revenue Bump in Q4
Friday, February 14, 2014
Press release from the issuing company
HARTSVILLE, S.C. - Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today reported financial results for its fourth quarter and full-year 2013.
Fourth Quarter Highlights
Full-Year 2013 Highlights
2014 Base Earnings Guidance Changed; Business Segments to be Modified
Fourth Quarter Review
"Operating profits from our Consumer Packaging segment increased 21 percent over the prior year's fourth quarter due to volume gains in most of the businesses in the segment, along with strong productivity and a positive price/cost relationship, partially offset by higher labor and other operating expenses. In addition, operating profits from our Display and Packaging segment improved slightly."
"Fourth quarter operating profits declined 8 percent in our Paper and Industrial Converted Products segment as strong productivity improvements, modest volume growth and insurance proceeds were more than offset by higher labor, maintenance and other operating costs, and an increase in profits deferred on intercompany paper sales. Operating profits in our Protective Solutions segment also declined during the fourth quarter as the benefit of improved productivity was more than offset by a negative price/cost relationship and higher labor and other operating expenses, including costs associated with the start up of new operations."
GAAP net income attributable to Sonoco in the fourth quarter was $54.7 million, or $.53 per diluted share, compared with $42.8 million, or $.42 per diluted share, in 2012. Base earnings in the fourth quarter were $59.9 million, or $.58 per diluted share, compared with $57.1 million, or $.56 per diluted share, in 2012. Base earnings and base earnings per diluted share are non-GAAP financial measures adjusted to remove restructuring charges, asset impairment charges, acquisition expenses and other items, if any, the exclusion of which the Company believes improves comparability and analysis of the underlying financial performance of the business.
Fourth quarter base earnings exclude $.06 per diluted share in after-tax charges related to restructuring activities involving previously announced plant closures offset by $0.01 per diluted share in after-tax gains from insurance settlements. Base earnings in the fourth quarter of 2012 excluded after-tax charges of $.14 per diluted share which included a net income tax charge of $.11per diluted share largely consisting of tax expense related to the repatriation of accumulated offshore cash and $.04 in after-tax restructuring activities, offset by a $.01 per diluted share gain from insurance settlements and a favorable contingent purchase price adjustment. Additional information about base earnings and base earnings per diluted share, along with reconciliation to the most closely applicable GAAP financial measures, is provided later in this release.
Net sales for the fourth quarter were $1.22 billion, compared with $1.18 billion in the same period in 2012. This 3 percent improvement was driven by gains in volume and mix from the Company's Consumer Packaging, Paper and Industrial Converted Products and Protective Solutions segments along with higher selling prices. These improvements were partially offset by the previously announced closure of the Company's European recycling operations.
Gross profits were $221 million in the fourth quarter, up 8 percent, compared with $204 million in the same period in 2012. Gross profit as a percent of sales improved to 18.2 percent, compared with 17.3 percent in the same period in 2012. This improvement was due to strong productivity gains, volume growth and a positive price/cost relationship, partially offset by higher maintenance, labor and other costs. The Company's fourth quarter selling, general and administrative expenses increased 14 percent to $127 million due primarily to wage inflation and higher management incentives, compared with the previous year.
Cash generated from operations in the fourth quarter was $117 million, compared with $111 million in the same period in 2012. Operating cash flow increased during the quarter due to higher GAAP net income and beneficial changes in working capital, partially offset by the impact of federal income tax credits associated with the Company's biomass boiler cogeneration project. Fourth quarter reported cash flows from operations were reduced by $17 million for tax-related operating cash flow benefits received in prior quarters that became a reduction of capital expenditures when the federal income tax credits were earned upon the December 2013 completion of the project. Including this $17 million, total federal tax credits related to the biomass boiler and reported as a reduction of capital expenditures, were $21.9 million. Net capital expenditures and cash dividends were $27 million and $32 million, respectively, during the quarter, compared with $45 million and$30 million, respectively, during the same period in 2012.
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