Fourth Quarter Highlights
- Fourth quarter 2015 GAAP earnings per diluted share were $.55, compared with $.48 in 2014.
- Fourth quarter 2015 GAAP results include $.09 per diluted share, after tax, in asset impairment and restructuring expenses and other non-base charges, net of gains related to releases of deferred tax valuation allowances, compared with $.13 per diluted share, after-tax, in asset impairment and restructuring charges, acquisition expenses and acquisition inventory step-up costs in the fourth quarter of 2014.
- Base net income attributable to Sonoco (base earnings) for fourth quarter 2015 was $.64 per diluted share, compared with $.61 in 2014. (See base earnings definition and reconciliation later in this release.) Sonoco previously provided fourth quarter base earnings guidance of $.59 to $.64 per diluted share.
- Fourth quarter 2015 net sales declined 3.8 percent to $1.27 billion, due primarily to the negative impact of foreign currency translation.
- Cash flow from operations for the fourth quarter was $146 million, compared with $151 million in 2014. Free cash flow in the quarter was $49 million, compared with $78 million in 2014.
2015 Full-Year Highlights
- Full-year 2015 GAAP earnings per diluted share were $2.44, compared with $2.19 in 2014.
- Full-year 2015 GAAP results were negatively impacted by $.07 per diluted share, after-tax, from a combination of the following: a favorable disposition of Fox River-related claims/litigation; gain on the sale of two metal end plants and favorable tax reserve adjustments, which were more than offset by foreign exchange driven asset impairments in Venezuela; charges for restructuring costs, asset impairment charges, acquisition-related and environmental remediation expenses; and professional fees to investigate and correct the financial misstatements at the Irapuato packaging center. Prior-year results were negatively impacted by $.22 per diluted share, after-tax, primarily composed of restructuring-related charges and acquisition expenses.
- Full-year 2015 base earnings were $2.51 per diluted share, up 4.2 percent from $2.41 per diluted share in 2014. Sonoco previously guided full-year base earnings to be in the range of $2.46 to $2.51 per diluted share.
- Net sales for 2015 were $4.96 billion, down 1 percent from $5.02 billion in 2014.
- Cash flow from operations for 2015 was $453 million, up 8.4 percent from $418 million in 2014. Free cash flow was $155 million, compared to $120 million in 2014.
2016 Guidance and Common Stock
- Full-year 2016 base earnings are projected to be in the range of $2.64 and $2.74 per diluted share, with a targeted mid-point of $2.69 per diluted share.
- Base earnings for the first quarter of 2016 are projected to be in the range of $.57 to $.62 per diluted share. Base earnings in the first quarter of 2015 were $.54 per diluted share. As a result of the Company’s accounting calendar, the first quarter of 2016 will contain 94 days, six more than in 2015, and the fourth quarter will contain 90 days, five fewer than in 2015.
- 2016 free cash flow is projected to be approximately $140 million.
- Sonoco’s Board of Directors approved repurchasing up to $100 million in common stock in open market transactions beginning immediately. The Board also restored the Company’s residual share repurchase authorization to its original five million shares.
Fourth Quarter Comments
“Despite diverging global economic conditions and headwinds stemming from the continued strength of the U.S. dollar, Sonoco put up solid results led by record fourth quarter performances in our Consumer Packaging and Protective Solutions segments, partially offset by lower results in our Paper and Industrial Converted Products segment,” said Sonoco President and Chief Executive Officer Jack Sanders. “Overall, gains from a positive price/cost relationship; volume growth, particularly in our Consumer Packaging and Protective Solutions segments; acquisition earnings; and a lower effective tax rate more than offset a negative mix in some of our businesses, the impact of foreign currency translation and higher labor, pension, maintenance and other operating costs.
“Operating profit in our Consumer Packaging segment improved just over 8 percent and reached a record for the fifth consecutive quarter. This quarter’s improvement was a result of a positive price/cost relationship, acquisition earnings and solid volume growth, partially offset by higher pension and other operating costs, lower manufacturing productivity and unfavorable exchange rate changes. Operating profits in our Display and Packaging segment showed significant improvement due to a positive/price cost relationship, manufacturing productivity improvements and the reimbursement of excess costs by a customer.
“Operating profit in our Paper and Industrial Converted Products segment declined 32.4 percent from the prior-year quarter. More than half of the negative variance for the segment was directly related to the impact of declining market conditions on our one corrugating medium paper machine with the balance essentially stemming from unfavorable exchange rates changes and higher pension expense.
“In our Protective Solutions segment, operating profits grew nearly 12 percent due to continued strong volume growth, a positive price/cost relationship and manufacturing productivity improvements, which more than offset negative mix and higher labor, maintenance and other operating costs.”