World News: 14:20 GMT Friday 7th December 2018. [Sonoco Products Company via Globe Newswire via SPi World News]
HARTSVILLE, S.C., Dec. 07, 2018 (GLOBE NEWSWIRE) -- Sonoco (NYSE: SON), one of the largest diversified global packaging companies, today provided an update on its strategy and financial guidance at a meeting with the investment community in New York.
Featured presenters at the meeting included: Rob Tiede, president and CEO; Barry Saunders, senior vice president and CFO; Howard Coker, senior vice president, Global Paper/Industrial Converted Products; Rodger Fuller, senior vice president, Global Consumer Packaging; and Julie Albrecht, vice president, Treasurer and CFO-elect. Other participants in the conference included: Marcy Thompson, vice president, Marketing and Innovation; Mike Pope, division vice president and general manager, Sonoco Recycling; and Greg Munoz, staff vice president, Supply Management and Logistics.
Fourth-quarter and full-year 2018 base earnings guidance is being raised to $0.79 to $0.85 and $3.32 to $3.38 per diluted share, respectively. The Company previously provided guidance of $0.75 to $0.81 and $3.28 to $3.34 per diluted share for these respective periods. The increase in base earnings guidance is due to the receipt of business interruption insurance proceeds in the fourth quarter associated with the impact of flooding on operations from Hurricane Florence in September. In 2017, the Company reported fourth quarter and full-year GAAP earnings of $.06 and $1.74 per diluted share, and base earnings of $0.72 and $2.79 per diluted share.
Note: Reconciliations of non-GAAP financial measures to GAAP financial measures are available on our website at . Base earnings and base earnings per diluted share are non-GAAP financial measure adjusted to remove restructuring charges, asset impairment charges, gains/losses on disposition of assets, acquisitions and divestiture expenses and other items, if any, the exclusion of which the Company believes improve comparability and analysis of the underlying financial performance of the business.
Guidance for 2018 operating cash flow and free cash flow has been raised to $590 million to $610 million and $250 million to $270 million, respectively. The Company previously provided operating cash flow and free cash flow guidance of $580 million to $600 million and $230 million to $250 million, respectively. The increase in guidance for 2018 free cash flow is due primarily to lower than anticipated capital spending. (Free cash flow is a non-GAAP financial measure which may not represent the amount of cash flow available for general discretionary use. Free cash flow is defined as cash flow from operations minus net capital expenditures and cash dividends. Net capital expenditures is defined as capital expenditures minus proceeds from, and/or costs incurred in, the disposition of capital assets.)
Note: 2019 GAAP EPS guidance is not provided in this release due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast: possible gains or losses on the sale of businesses, or other assets, restructuring costs and restructuring-related impairment charges, acquisition-related costs and the income tax effect of these items and/or other income tax-related events. These items could have a significant impact on the Company’s future GAAP financial results.
The Company’s 2019 midpoint base earnings target assumes $0.06 per share positive impact from 2018 acquisitions and a $0.08 per share addition from volume/mix growth. In addition, a positive price/cost relationship driven by procurement productivity and commercial excellence initiatives should contribute $0.27 per share. Offsetting these favorable factors are an expected $0.10 negative impact from non-material inflation in excess of productivity; a $0.10 per diluted share negative impact from other fixed-cost charges; and approximately $0.04 per share negative impact from higher income taxes and a strengthening of the dollar against other currencies, partially offset by lower interest expense.
At the midpoint, 2019 cash flow from operations is projected to be approximately $610 million and, after spending approximately $205 million in capital investments and paying $170 million in dividends to shareholders, free cash flow is projected to be approximately $235 million. Depreciation and Amortization is projected to be $252 million in 2019. Excluding several atypical items which benefitted operating cash flow in 2018, the increase in 2019 operating cash flow and free cash flow would represent year-over-year growth of 6.5 percent and 11.9 percent, respectively.
Commenting on the Company’s 2018 and 2019 expectations, Tiede said, “Despite hurricanes, accelerating inflation, tariffs and sluggish consumer-served market demand, Sonoco’s businesses have produced strong results in 2018. We have a strong, diversified business mix, a solid balance sheet and a track record for achieving consistent earnings improvement. In 2018, we expect to produce record sales, record operating profit, record base earnings, and, record operating cash flow and free cash flow; and our outlook for 2019 has us again achieving record top-line and bottom-line results.” A telephonic replay of today’s investor day conference call will be available starting at Noon ET, to U.S. callers at 855-859-2056 and international callers at +404-537-3406. The replay passcode for both U.S. and international calls is 7043206. The archived call will be available through December 17, 2018. The webcast call also will be archived in the Investor Relations section of Sonoco’s website. A presentation of today’s meeting is also available on the Investor Relations section of our website.
Forward-looking statements include, but are not limited to, statements regarding: availability and supply of raw materials, and offsetting high raw material costs; improved productivity and cost containment; improving margins and leveraging strong cash flow and financial position; effects of acquisitions and dispositions; realization of synergies resulting from acquisitions; costs, timing and effects of restructuring activities; adequacy and anticipated amounts and uses of cash flows; expected amounts of capital spending; refinancing and repayment of debt; financial strategies and the results expected of them; financial results for future periods; producing improvements in earnings; profitable sales growth and rates of growth; market leadership; research and development spending; extent of, and adequacy of provisions for, environmental liabilities; adequacy of income tax provisions, realization of deferred tax assets, outcomes of uncertain tax issues and tax rates; goodwill impairment charges and fair values of reporting units; future asset impairment charges and fair values of assets; anticipated contributions to pension and postretirement benefit plans, fair values of plan assets, long-term rates of return on plan assets, and projected benefit obligations and payments; creation of long-term value and returns for shareholders; continued payment of dividends; and planned stock repurchases.
Such forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning our future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. The risks, uncertainties and assumptions include, without limitation:
The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed herein might not occur.
Additional information concerning some of the factors that could cause materially different results is included in the Company’s reports on forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. Such reports are available from the Securities and Exchange Commission’s public reference facilities and its website, sec.gov, and from the Company’s investor relations department and the Company’s website, www.sonoco.com.
Contact: Roger Schrum
Globe Newswire: 14:20 GMT Friday 7th December 2018
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