(Updated - October 18, 2018 6:49 AM EDT)

Sonoco (NYSE: SON) reported Q3 EPS of $0.86, $0.04 better than the analyst estimate of $0.82. Revenue for the quarter came in at $1.36 billion versus the consensus estimate of $1.38 billion.

Third Quarter Highlights

• Third-quarter 2018 GAAP earnings per diluted share were $0.72, compared with $0.72 in 2017.
• Third-quarter 2018 GAAP earnings included after-tax restructuring and asset impairment charges of $15.0 million related to exiting a packaging center contract; plant closures; and non-base tax-related gains. In the third quarter of 2017, GAAP results included $3.8 million, after tax, in acquisition-related expenses and non-base tax-related charges.
• Base net income attributable to Sonoco (base earnings) for third quarter 2018 was $0.86 per diluted share, compared with $0.76 in 2017. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided third-quarter 2018 base earnings guidance of $0.82 to $0.88 per diluted share.
• Third-quarter 2018 net sales were $1.36 billion, up 3.0 percent from $1.32 billion in 2017.
• Cash flow from operations was $451.5 million in the first nine months of 2018, compared with $281.0 million in 2017. Year-to-date free cash flow was $218.9 million, compared with $25.6 million in 2017. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
• On October 1, 2018, Sonoco acquired the remaining 70 percent interest in the Conitex Sonoco joint venture and a composite can operation in Spain from Texpack, Inc., for approximately $143 million in cash. Conitex Sonoco is a vertically integrated global leader in the manufacturing of paper-based cones and tubes used in the textile industry. Conitex Sonoco's results will be included in the Company's Paper and Industrial Converted Products segment and the Spanish composite can operation in the Consumer Packaging segment.

Fourth Quarter and Full-Year Guidance Update

• Base earnings for the fourth quarter of 2018 are estimated to be in the range of $.75 to $.81 per diluted share, compared to $.72 per diluted share in the fourth quarter of 2017.
• Full-year 2018 base earnings guidance has been updated to $3.28 to $3.34 per diluted share. Fourth-quarter and full-year guidance reflects the Company's expected solid year-over-year results, despite additional impact from Hurricane Florence; expenses from tariffs on steel, aluminum and other products; along with higher than previously expected resin, freight and other non-material inflation.
• Full-year 2018 operating cash flow and free cash flow guidance has been raised to a range of $580 million to $600 million and $230 million to $250 million, respectively. Previous operating cash flow and free cash flow guidance was a range of $570 million to $590 million and $190 million to $210 million, respectively.

Commenting on the Company’s outlook, Tiede said, “The third quarter certainly presented some challenges for us, not the least of which was the negative impact of Hurricane Florence on our Hartsville mill complex. Like many companies, we saw and continue to see inflationary cost pressures from higher materials, particularly resins, along with freight, energy and other operating costs. Because of this inflation, we are driving cost recovery through proactive price increases in many of our businesses. Despite challenges, our growth and margin improvement targets for 2018 remain on track. Looking ahead, we are also optimistic about the contribution from our Conitex Sonoco acquisition, which creates opportunities for us to grow our Paper/Industrial Converted Products segment in the fast-growing Asia markets. Sonoco is a resilient company with a 120-year track record of overcoming obstacles through our strong diversified mix of industrial, consumer and protective packaging businesses. We expect a solid fourth quarter and are projecting a year-over-year improvement in full-year base earnings of between 17 percent and 20 percent and a significant improvement in free cash flow."

GUIDANCE:

Sonoco sees FY2018 EPS of $3.28-$3.34, versus the consensus of $3.29.

For earnings history and earnings-related data on Sonoco (SON) click here.