ENP Newswire -
Release date- 18072014 -
Second Quarter Highlights
Second quarter 2014 GAAP earnings per diluted share were
Second quarter 2014 GAAP results include
Base net income attributable to
Second quarter 2014 net sales were
Cash flow from operations was
Earnings Guidance Update
Base earnings for the third quarter of 2014 are estimated to be in the range of
Full-year 2014 base earnings guidance remains unchanged at
2014 free cash flow is projected to be approximately
Second Quarter Review
Commenting on the Company's second quarter results, President and Chief Executive Officer
However, we were somewhat disappointed that base earnings only reached the low end of our guidance as strong performances in our Paper and Industrial Converted Products and
Overall in the quarter, the Company benefitted from improvements to manufacturing productivity, a favorable price/cost relationship, lower pension expense and acquisitions. Partially offsetting these gains were higher labor, maintenance and other operating costs while volume was virtually flat.'
'Earnings in our Paper and Industrial Converted Products segment challenged all-time highs with operating profits gaining 29 percent over the prior-year quarter on a positive price/cost relationship, productivity improvements and lower pension expense, which were partially offset by higher labor and other operating costs.
Segment volume was essentially flat in the quarter despite a significant reduction in demand for steel reels for the oil and gas industry. In our Protective Solutions segment, operating profits declined 15 percent due to a negative price/cost relationship and higher labor, maintenance and other operating costs, somewhat offset by favorable changes in the mix of products sold.'
'Operating profits in our
GAAP net income attributable to
Second quarter base earnings exclude
Base earnings in the second quarter of 2013 excluded after-tax charges of
Net sales for the second quarter were
Gross profits were
This 50 basis point improvement was due primarily to productivity improvements, a positive price/cost relationship and lower pension expense, partially offset by general inflation. The Company's second quarter selling, general and administrative expenses increased 4 percent to
Cash generated from operations in the second quarter was
Net capital expenditures and cash dividends were
For the first six months of 2014, net sales were
Net income attributable to
During the same period in 2013 earnings were negatively impacted by
Base earnings for the first half of 2014 were
Gross profit was
For the first six months of 2014, cash generated from operations was
In addition, cash flow was impacted by the funding of a proposed settlement of environmental claims and litigation associated with
The year-over-year decrease in capital expenditures is largely due to the completion in December of 2013 of a new biomass boiler in
Net interest expense for the second quarter of 2014 decreased to
Third Quarter and Full-Year 2014 Outlook
Free cash flow is expected to be approximately
Although the Company believes the assumptions reflected in the range of guidance are reasonable, given uncertainty regarding the future performance of the overall economy and potential changes in raw material prices and other costs, as well as other risks and uncertainties, including those described below, actual results could vary substantially.
Commenting on the Company's outlook, Sanders said, 'We bucked headwinds from severe weather in the first quarter and experienced tepid consumer spending for packaged food in the second quarter, but we remain optimistic for the balance of the year and expect to see year-over-year improvement in our industrial, consumer and protective solutions segments.
We are very encouraged by the strong second quarter performance of our industrial-focused businesses and expect continued year over year operating improvement. In our consumer businesses, our customers remain optimistic that consumer demand will follow the normal seasonal pick up during the second half and we remain focused on driving productivity improvements more in line with historical levels. Price/cost headwinds in our protective solutions business are expected to ease in the second half and we expect seasonal volume improvement.'
'Finally, our efforts to drive organic sales growth through the development of innovative solutions continue to gain momentum. We are currently working with our customers on more than a dozen projects utilizing our unique i6 Innovation Process. By combining our broad technical expertise in material science, design, graphics management and supply chain capabilities with expanded market and consumer insights, we can accelerate the development of customized solutions that help our customers build new business.'
This change reflects the evolving integration occurring between these businesses, enabling them to better leverage the Company's capabilities, products and services to provide complete solutions to our retail merchandising customers. Prior period results for the affected segments have been recast to reflect this change.
Segment operating results do not include restructuring and asset impairment charges, acquisition expenses, interest income and expense, income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis.
Second quarter 2014 sales for the segment were
Segment sales during the quarter were essentially flat as higher selling prices and sales added from the prior-year acquisition of a small graphics management business in the
Second quarter 2014 sales for this segment were
Sales for the quarter were up 3 percent year over year on volume growth in U.S. display and packaging fulfillment activity and higher selling prices. Quarterly operating profit for the segment grew 24 percent due to volume gains, a positive price/cost relationship and productivity improvements.
Paper and Industrial Converted Products
The Paper and Industrial Converted Products segment includes the following products: paperboard tubes and cores; fiber-based construction tubes; wooden, metal and composite wire and cable reels and spools and recycled paperboard, linerboard, corrugating medium, recovered paper and material recycling services.
Second quarter 2014 sales for the segment were
Segment sales were up 4 percent during the quarter as sales from business acquired during the past twelve along with higher selling prices were partially offset by the negative impact of foreign exchange. Operating profits grew 29 percent year over year as a positive price/cost relationship, strong productivity improvements and lower pension expense were only partially offset by a negative mix of business and higher labor, maintenance and other operating costs.
The Protective Solutions segment includes the following products: custom-engineered, paperboard-based and expanded foam protective packaging and components and temperature-assured packaging.
Second quarter 2014 sales were
Operating profits declined 15 percent due to a negative price/cost relationship and higher maintenance, labor and other operating costs, partially offset by favorable volume/mix.
Conference Call Webcast
The live conference call and a corresponding presentation can be accessed via the Internet at www.sonoco.com, under the Investor Relations section, or at http://investor.sonoco.com. A telephonic replay of the call will be available starting at
The replay passcode for both U.S. and international calls is 84481282. The archived call will be available through
Founded in 1899,
Statements included herein that are not historical in nature, are intended to be, and are hereby identified as 'forward-looking statements' for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. The words 'estimate,' 'project,' 'intend,' 'expect,' 'believe,' 'consider,' 'plan,' 'strategy,' 'opportunity,' 'target,' 'anticipate,' 'objective,' 'goal,' 'guidance,' 'outlook,' 'forecast,' 'future,' 're-envision', 'will,' 'would,' 'aspires,' or the negative thereof, and similar expressions identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements regarding offsetting high raw material costs, improved productivity and cost containment, adequacy of income tax provisions, refinancing of debt, realization of synergies resulting from acquisitions, adequacy of cash flows, anticipated amounts and uses of cash flows, effects of acquisitions and dispositions, adequacy of provisions for environmental liabilities, financial strategies and the results expected from them, sales growth, market leadership, growth opportunities, continued payments of dividends, stock repurchases, producing improvements in earnings, financial results for future periods, goodwill impairment charges, expected amounts of capital spending, anticipated contributions to benefit plans, and creation of long-term value for shareholders.
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, expectations, beliefs, plans, strategies 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 and uncertainties include, without limitation:
availability and pricing of raw materials;
success of new product development and introduction;
ability to maintain or increase productivity levels and contain or reduce costs;
ability to manage the mix of business to take advantage of growing markets while reducing cyclical effects of some of the Company's existing business on operating results;
international, national and local economic and market conditions;
availability of credit to us, our customers and/or suppliers in needed amounts and/or on reasonable terms;
fluctuations in obligations and earnings of pension and postretirement benefit plans;
pricing pressures, demand for products and ability to maintain market share;
continued strength of our paperboard-based tubes and cores, and composite can operations;
anticipated results of restructuring activities;
resolution of income tax contingencies;
ability to successfully integrate newly acquired businesses into the Company's operations;
ability to win new business and/or identify and successfully close suitable acquisitions at the levels needed to meet growth targets;
rate of growth in foreign markets;
foreign currency, interest rate and commodity price risk and the effectiveness of related hedges;
liability for and anticipated costs of environmental remediation actions;
accuracy of assumptions underlying projections related to goodwill impairment testing, and accuracy of management's assessment of goodwill impairment;
accuracy of assumptions underlying fair value measurements, accuracy of management's assessments of fair value and fluctuations in fair value;
accuracy in valuation of deferred tax assets;
actions of government agencies and changes in laws and regulations affecting the Company;
loss of consumer or investor confidence and
economic disruptions resulting from terrorist activities
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
References to our Website Address
References to our website address and domain names throughout this release are for informational purposes only, or to fulfill specific disclosure requirements of the
Definition and Reconciliation of Non-GAAP Financial Measures
The Company's results determined in accordance with U.S. generally accepted accounting principles (GAAP) are referred to as 'as reported' or 'GAAP' results.
Some of the information presented in this press release reflects the Company's 'as reported' or 'GAAP' results adjusted to exclude amounts related to restructuring initiatives, asset impairment charges, environmental charges, acquisition costs, excess insurance recoveries, losses from the early extinguishment of debt, and certain other items, if any, the exclusion of which management believes improves comparability and analysis of the underlying financial performance of the business.
These adjustments result in the non-GAAP financial measures referred to in this press release as 'Base Earnings' and 'Base Earnings per Diluted Share.'
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Material limitations associated with the use of such measures are that they do not reflect all period costs included in operating expenses and may not reflect financial results that are comparable to financial results of other companies that present similar costs differently. Furthermore, the calculations of these non-GAAP measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.
To compensate for these limitations, management believes that it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP measures that exclude certain elements, as described above.
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