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Apr 04, 2021
Sonoco Q1 2021 Earnings Report
Sonoco's first quarter 2021 results were reported, demonstrating resilience amidst challenges and improved cash flow.
Key Takeaways
Sonoco reported a 3.8% increase in net sales to $1.35 billion and GAAP earnings per diluted share of $0.71. The company faced challenges from severe winter weather and global supply chain disruptions but benefited from productivity gains and improved volume/mix. Cash flow from operations increased by 58% year-over-year.
Net sales increased by 3.8% to $1.35 billion compared to the previous year.
GAAP earnings per diluted share were $0.71, while base earnings per diluted share were $0.90.
Cash flow from operations improved to $138.7 million, and free cash flow reached $99.4 million.
The company completed the sale of its U.S. Display and Packaging business and changed its operating and reporting structure to Consumer Packaging and Industrial Paper Packaging.
Sonoco
Sonoco
Sonoco Revenue by Segment
Revenue by Segment
Consumer Packaging Revenue
CapyFin.comIndustrial Paper Packaging Revenue
CapyFin.com Forward Guidance
Sonoco projects second quarter and full-year 2021 base earnings to be in the range of $0.82 to $0.88 and $3.50 to $3.60 per diluted share, respectively. Full-year 2021 cash flow from operations and free cash flow are expected to be between $570 million and $600 million and $270 million and $300 million, respectively.
Positive Outlook
- General macroeconomic conditions are expected to continue improving due to government stimulus actions and further business reopening as the pandemic unwinds.
- Demand in most consumer and industrial businesses is expected to remain solid.
- Consumer Packaging segment is expected to continue benefiting from consumer at-home eating needs.
- Demand for uncoated recycled paperboard remains strong globally.
- Tube, core and cone products are seeing a resurgence in demand to pre-COVID-19 levels.
Challenges Ahead
- Inflationary risks are a concern near-term.
- Continued inflation in recycled fiber and resins, primary raw materials, along with chemicals, adhesives, freight, and other operational costs is expected until supply chains stabilize.
- The company expects to recognize non-cash, pre-tax settlement charges of approximately $560 million in the second quarter of 2021 associated with the settlement of the outstanding liabilities of the Sonoco Pension Plan for Inactive Participants.
- The expected settlement charges will lead to a net GAAP loss in the second quarter and for the full year.
- Uncertainty regarding the impact of the COVID-19 pandemic on global supply chains remains a risk.
Revenue & Expenses
Visualization of income flow from segment revenue to net income