Sonoco reports impressive Q1 results
Sonoco’s net sales for the first quarter of 2022 were a record $1.77 billion, up 30.9% from last year’s first quarter sales of $1.35 billion.
This growth was driven by higher selling prices, mostly implemented to offset inflation, sales added from the metal packaging acquisition and 2% growth in volume/mix. These positive factors were partially offset by the April 2021 divestiture of the Company’s US display and packaging business and the negative impact from foreign currency translation.
Commenting on the company’s performance, Howard Coker, president and chief executive officer, said: “Our Sonoco team delivered exceptional top-line and bottom-line results during the first quarter which exceeded the high end of our recently increased guidance and were driven by record performances in our Consumer Packaging and Industrial Paper Packaging segments.
“We welcomed Ball Metalpack to the Sonoco family on 26 January 2022, and were very pleased with their better-than-expected first-quarter results. In addition, we continue to make solid progress on our integration activities and look forward to the contributions the metal packaging team will make to the future success of Sonoco.
“Overall, the company’s Q1 earnings benefited from strong price/cost recovery across most of our businesses, the addition of metal packaging and solid customer demand in our consumer and all other businesses. These positive factors were only partially offset by last year’s divestiture of the US display and packaging business and the impact of foreign currency translation.
“Our Consumer Packaging segment achieved record sales and operating profit grew over 113% versus the prior-year period due primarily to the earnings added by metal packaging, a positive price/cost relationship, productivity improvements and solid gains in volume/mix. Our Industrial Paper Packaging segment also produced record sales and operating profit, which improved almost 39% over the prior year period due primarily to positive price/cost recovery.
“Finally, despite strong volumes and solid price/cost results, the all other group of businesses experienced a 23% decline in operating profit due mostly to the 2021 divestiture of the US display and packaging business.”
First Quarter Highlights
- First quarter 2022 net sales were a record $1.77 billion, compared with $1.35 billion in the same period in 2021.
- First quarter 2022 GAAP earnings per diluted share were $1.17, compared with $0.71 in the same period in 2021.
- First quarter 2022 GAAP earnings include net after-tax, non-base charges totaling $67.4 million, or $0.68 per diluted share. These charges largely relate to the acquisition of Ball Metalpack, rebranded as Sonoco Metal Packaging, changes in the Last In, First Out (“LIFO”) inventory reserve, and the amortisation expense of acquisition intangibles. In the first quarter of 2021, GAAP earnings included net after-tax, non-base charges of $29.0 million, or $0.29 per diluted share, as further described in the First Quarter Review.
- Base net income attributable to Sonoco (base earnings) for the first quarter 2022 was a record $1.85 per diluted share, compared with $1.00 per diluted share in the same period of 2021. 2021 base results throughout the release have been revised to conform with the Company’s current Base Earnings definition which excludes amortization of acquisition intangibles. The Company recently provided updated first quarter guidance of $1.70 to $1.80 per diluted share. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.)
- Cash flow from operations was $1.1 million in the first quarter of 2022, compared to $138.7 million in the same period of 2021. Free cash flow was a use of $66.3 million in the first quarter of 2022, compared with $99.4 million generated in the same period of 2021.