Sonoco Q1 2021 Earnings Report
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.
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Sonoco Revenue by Segment
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