UPDATE: Sonoco (SON) Tops Q2 EPS by 1c, Revenues Miss; Provides 3Q EPS Outlook
Sonoco (NYSE: SON) reported Q2 EPS of $0.79, $0.01 better than the analyst estimate of $0.78. Revenue for the quarter came in at $1.25 billion versus the consensus estimate of $1.32 billion.
Second Quarter Highlights
- Second-quarter 2020 GAAP earnings per diluted share were $0.55, compared with $0.80 in 2019.
- Second-quarter 2020 GAAP earnings included net after-tax charges of $24.9 million related primarily to operational restructuring activity and non-operating pension costs. In the second quarter of 2019, GAAP earnings included net after-tax charges of $15.3 million related mostly to restructuring actions and non-operating pension costs.
- Base net income attributable to Sonoco (base earnings) for second-quarter 2020 was $0.79 per diluted share, compared with $0.95 in 2019. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided second-quarter 2020 base earnings guidance of $0.73 to $0.83 per diluted share.
- Second-quarter 2020 net sales were $1.25 billion, compared with $1.36 billion in 2019.
- Cash flow from operations was $281.0 million in the first half of 2020, compared to $40.1 million in 2019. Free cash flow was $123.1 million, compared with $(144.9) million in the first six months of 2019. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
CEO Comments
Commenting on the Company’s second-quarter performance, Howard Coker, President and Chief Executive Officer, said, "Our Sonoco team did a tremendous job during the quarter to produce bottom-line results which were in line with our expectations despite facing the toughest operating environment since the Great Recession. Results from our diverse portfolio of Consumer- and Industrial-related businesses mirrored the current divergent macroeconomic environment. Our Consumer Packaging segment produced record results during the quarter due to strong demand for food packaging driven by consumers' stay-at-home eating habits, while our Paper and Industrial Converted and Protective Solutions segments were dragged down by extremely weak demand in most of our industrial served markets due to virus-related shutdowns. Overall, the Company's bottom line results benefited from strong productivity, targeted cost savings and earnings from recent acquisitions. However, these positive factors were more than offset by negative volume/mix, a significant negative price/cost relationship due to rising recovered paper costs that primarily impacted our Paper and Industrial Converted Product segment along with the negative impact of foreign exchange translation, increased interest expense and a higher effective tax rate.
"We're also very pleased with our strong cash flow generation during the quarter which shows the resiliency of our business and the focus of our team on this very important activity. Sonoco's liquidity position is stronger than ever and we will keep this, along with our investment-grade credit rating, as a top priority."
GUIDANCE:
Sonoco sees Q3 2020 EPS of $0.73-$0.83, versus the consensus of $0.78.
- Sonoco expects third-quarter base earnings to be in a range of $0.73 to $0.83 per diluted share, compared to $0.97 per diluted share reported in the third quarter of 2019.
For earnings history and earnings-related data on Sonoco (SON) click here.