Sonoco Products Company (“Sonoco” or the “Company”) (NYSE: SON),
one of the largest sustainable global packaging companies, today
reported financial results for its second quarter ended
July 2, 2023.
Summary
- Strong performance and cash flows
despite operating in a generally disruptive demand environment
- Most of our businesses were at or
above expectations for the quarter due to commercial and
operational excellence, with particular strength in the flexible
packaging and rigid paper container businesses, offset by weakness
in the metal packaging and industrial North American region
businesses
- Inventory management and destocking
trends among our customers as well as inflationary pricing
pressures led to lower and increasingly uncertain demand which
impacted operational efficiency in our metal and industrials
businesses
- Remained disciplined in managing
working capital to generate $349 million of operating cash flow in
the first six months of 2023
- Lowered full-year Adjusted EPS and
Adjusted EBITDA guidance based on lower volume trends in Consumer
Packaging (“Consumer”) and Industrial Paper Packaging
(“Industrial”) businesses and expectations of a less favorable
price/cost environment in Industrial during the second half of the
year
- Maintaining full-year operating
cash flow guidance
Second Quarter 2023 Consolidated Financial
Results |
(Dollars in millions except per share data) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
GAAP
Results |
July 2, 2023 |
July 3, 2022 |
|
Change |
|
|
|
|
|
|
|
Net sales |
$ |
1,705 |
$ |
1,913 |
|
(11)% |
|
Operating profit |
$ |
188 |
$ |
197 |
|
(5)% |
|
Net income attributable to
Sonoco |
$ |
115 |
$ |
132 |
|
(13)% |
|
EPS (diluted) |
$ |
1.16 |
$ |
1.33 |
|
(13)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Non-GAAP Results(1) |
July 2, 2023 |
July 3, 2022 |
|
Change |
|
|
|
|
|
|
|
Adjusted operating profit |
$ |
211 |
$ |
250 |
|
(16)% |
|
Adjusted EBITDA |
$ |
275 |
$ |
312 |
|
(12)% |
|
Adjusted net income
attributable to Sonoco (“Adjusted Earnings”) |
$ |
136 |
$ |
174 |
|
(22)% |
|
Adjusted EPS (diluted) |
$ |
1.38 |
$ |
1.76 |
|
(22)% |
|
|
|
|
|
|
(1) See the Company’s definitions of non-GAAP
financial measures, explanations as to why they are used, and
reconciliations to the most directly comparable GAAP financial
measures later in this release.
- Net sales decreased to $1.7 billion
driven by lower volumes.
- GAAP operating profit decreased to
$188 million as lower overall volume and mix was partially offset
by lower acquisition-related and restructuring costs, gains on
asset sales, higher price/cost and productivity.
- Achieved net income margin of 6.7%
and Adjusted EBITDA margin of 16.1%.
- Effective tax rates on GAAP and
Adjusted Earnings were 26.8% and 25.6%, respectively, compared with
25.8% and 25.0%, respectively, from the second quarter of the prior
year.
- GAAP net income decreased to $115
million for diluted GAAP EPS of $1.16.
- Adjusted net income attributable to
Sonoco decreased to $136 million for diluted Adjusted EPS of
$1.38.
- Adjusted operating profit and
Adjusted EBITDA declined to $211 million and $275 million,
respectively, due to lower overall volume and mix, partially offset
by higher price cost and productivity.
- Achieved Adjusted EBITDA margin of
16.1%.
Sonoco President and CEO, Howard Coker stated,
“Sonoco continues to operate well with most of our businesses
achieving commercial, operational, and productivity
objectives. In the second quarter, volume softness
beyond our expectations negatively impacted Consumer metal
packaging and Industrials. In metal, accelerated
inventory reduction programs within our top food and aerosol
customers resulted in lower than expected demand and negatively
impacted operating leverage. In Industrials, volume for paper and
converted products remained low across all geographies and end
markets including paper, film, textile, and appliances.
Industrial customers cited lower end market demand and customer
destocking as factors for the declines. Despite these challenges,
our teams generated $349 million of operating cash flow for the
first six months of 2023. Throughout the quarter, our teams
continued to execute well in a volatile demand environment and I
express my sincere appreciation for their continued support of
Sonoco and our customers.”
Second Quarter 2023 Segment
Results(Dollars in millions except per share data)
Sonoco reports its financial results in two reportable segments:
Consumer and Industrial, with all remaining businesses reported as
All Other.
|
|
Three Months Ended |
|
|
Consumer Packaging |
July 2, 2023 |
July 3, 2022 |
Change |
|
|
|
|
|
|
Net sales |
$ |
924 |
|
$ |
990 |
|
(7)% |
|
Segment operating profit |
$ |
95 |
|
$ |
139 |
|
(32)% |
|
Segment operating profit
margin |
|
10 |
% |
|
14 |
% |
|
|
Segment Adjusted EBITDA1 |
$ |
125 |
|
$ |
168 |
|
(25)% |
|
Segment Adjusted EBITDA
margin1 |
|
14 |
% |
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
- Consumer net sales were $924
million as volumes were generally impacted by destocking trends
among our customers and inflationary pricing pressures within
retail.
- Consumer results included continued
strong performance in the flexible packaging and rigid paper
container businesses offset by weakness in the metal packaging and
rigid plastic businesses.
- Metal packaging operating profit
was impacted by continued unfavorable metal price overlap as well
as meaningful but non-market share related volume declines in
several key food and aerosol accounts.
|
|
Three Months Ended |
|
|
Industrial Paper Packaging |
July 2, 2023 |
July 3, 2022 |
Change |
|
|
|
|
|
|
Net sales |
$ |
585 |
|
$ |
727 |
|
(20)% |
|
Segment operating profit |
$ |
87 |
|
$ |
94 |
|
(8)% |
|
Segment operating profit
margin |
|
15 |
% |
|
13 |
% |
|
|
Segment Adjusted EBITDA1 |
$ |
115 |
|
$ |
121 |
|
(5)% |
|
Segment Adjusted EBITDA
margin1 |
|
20 |
% |
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
- Industrial volumes remained low
across all regions with limited signs of near-term
improvement.
- Net sales decreased 20% to $585
million due to volume and mix weakness in global demand for paper
and converted paper products.
- Strong execution in commercial and
operational excellence resulted in Adjusted EBITDA margin of
20%.
|
|
Three Months Ended |
|
|
All Other |
July 2, 2023 |
July 3, 2022 |
Change |
|
|
|
|
|
|
Net sales |
$ |
197 |
|
$ |
196 |
|
— |
% |
|
Operating profit |
$ |
29 |
|
$ |
17 |
|
73 |
% |
|
Operating profit margin |
|
15 |
% |
|
8 |
% |
|
|
Adjusted EBITDA1 |
$ |
35 |
|
$ |
23 |
|
53 |
% |
|
Adjusted EBITDA margin1 |
|
18 |
% |
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
- Net sales were $197 million as
strategic pricing actions were offset by volume and mix
declines.
- Operating profit and Adjusted
EBITDA improved by 73% and 53%, respectively, primarily due to
positive strategic pricing and strong productivity.
1Segment and All Other Adjusted EBITDA and
Adjusted EBITDA margin are non-GAAP financial measures. See the
Company’s reconciliations of these non-GAAP financial measures to
the most directly comparable GAAP financial measures later in this
release.
Balance Sheet and Cash Flow
Highlights
- Cash and cash equivalents were $319
million as of July 2, 2023, compared to $227 million as of
December 31, 2022.
- Total debt was $3,153 million as of
July 2, 2023, a decrease of $69 million from December 31,
2022.
- On July 2, 2023, the Company
had available liquidity of $1,069 million, including the undrawn
availability under its revolving credit facilities.
- Cash flow from operating activities
for the first six months of 2023 was $349 million, compared to $184
million in the same period of 2022.
- Capital expenditures, net of
proceeds from sales of fixed assets, for the first six months of
2023 were $90 million, compared to $144 million in the same period
last year. Capital expenditures were $162 million and net proceeds
from the sale of our timberland properties were $72 million for the
first six months of 2023.
- Free cash flow for the first six
months of 2023 was $259 million. See the Company's definition of
free cash flow, the explanation as to why it is used, and the
reconciliation to net cash provided by operating activities later
in this release.
- Dividends paid during the six
months ended July 2, 2023 increased to $98 million compared to
$92 million for the same period of the prior year.
Guidance(1)
Third Quarter
2023
- Adjusted EPS(2): $1.25 to $1.35
Full Year 2023
- Adjusted EPS(2): $5.10 to $5.40
- Cash flow from operating activities: $925 million to $975
million
- Free cash flow(3): $620 million to $720
million
- Adjusted EBITDA: $1.02 billion to $1.07 billion
“Based on the softer than expected second
quarter results and in recognition of our customers’ cautious
forecasts through the remainder of the year, we are reducing our
full year guidance. We intend to continue to manage variable and
fixed expenses and execute our continuous improvement programs to
improve results in the near and long term. While this near-term
volume outlook is disappointing, we are optimistic regarding the
number of long-term value-creating opportunities available within
our diverse portfolio from ongoing operational improvements,
accretive acquisitions, and non-core business divestitures which
will be timed to maximize value. Our innovative design engagements
focused on sustainable packaging and collaboration with customers
remain strong, and we remain confident in our strategy, our teams,
and our ability to generate strong cash flow and returns for
shareholders,” said Coker.
(1) Although the Company believes the
assumptions reflected in the range of guidance are reasonable,
given the uncertainty regarding the future performance of the
overall economy, the effects of inflation, the continued challenges
in global supply chains, potential changes in raw material prices,
other costs, and the Company’s effective tax rate, as well as other
risks and uncertainties, including those described below, actual
results could vary substantially. Further information can be found
in the section entitled Forward-looking Statements in this
release.
(2) Third quarter and full-year 2023 GAAP
guidance are 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 without
unreasonable efforts: restructuring costs and restructuring-related
impairment charges, acquisition/divestiture-related costs, gains or
losses on the sale of businesses or other assets, and the income
tax effects 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. Accordingly, quantitative reconciliation of
Adjusted EPS guidance have been omitted in reliance on the
exception provided by Item 10 of Regulation S-K.
(3) See reconciliation of projected cash flow
from operating activities to projected free cash flow later in this
release.
Conference Call
WebcastManagement will host a conference call and webcast
to further discuss these results beginning at 8:30 am EDT Tuesday,
August 1, 2023. The live conference call and a corresponding
presentation can be accessed via the Company’s Investor Relations
website at https://investor.sonoco.com. To listen via telephone,
please register in advance at
https://register.vevent.com/register/BI2e80cd98f361446fa3e24c0a35507e69.
Upon registration, all telephone participants will receive the
dial-in number along with a unique PIN number that can be used to
access the call. A replay of the conference call and webcast will
be archived on the Company’s Investor Relations website for at
least 30 days.
Contact Information: Lisa
WeeksVice President of Investor Relations &
Communicationslisa.weeks@sonoco.com 843-383-7524
About SonocoFounded in 1899,
Sonoco (NYSE:SON) is a global provider of packaging products. With
net sales of approximately $7.3 billion in 2022, the Company has
approximately 22,000 employees working in more than 310 operations
around the world, serving some of the world’s best-known brands.
With our corporate purpose of Better Packaging. Better Life.,
Sonoco is committed to creating sustainable products, and a better
world, for our customers, employees and communities. The Company
ranked first in the Packaging sector on Fortune’s World’s Most
Admired Companies for 2022 and was also included in Barron’s 100
Most Sustainable Companies for the fourth consecutive year. For
more information on the Company, visit our website at
www.sonoco.com.
Forward-looking Statements
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. In addition, the Company and its representatives may from
time to time make other oral or written statements that are also
“forward-looking statements.” Words such as “anticipate,” “assume,”
“believe,” “committed,” “consider,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,”
“intend,” “likely,” “may,” “might,” “objective,” “outlook,” “plan,”
“potential,” “project,” “seek,” “strategy,” “will,” or the negative
thereof, and similar expressions identify forward-looking
statements.
Forward-looking statements in this communication
include statements regarding, but not limited to: the Company’s
future operating and financial performance, including third quarter
and full-year 2023 outlook; the Company’s ability to manage
variable and fixed expenses; opportunities for operational
improvements; customer demand and volume outlook; the Company’s
relationships with its customers; the Company’s ability to create
near-term and long-term value and to generate cash flows and
returns for shareholders; expected benefits from accretive
acquisitions and divestitures; the effectiveness of the Company’s
strategy; the effects of the macroeconomic environment and
inflation on the Company and its customers; and outcomes of certain
tax issues and tax rates.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, those related to: the
Company’s ability to achieve the benefits it expects from
acquisitions and divestitures; the Company’s ability to execute on
its strategy, including with respect to acquisitions, divestitures,
cost management, restructuring and capital expenditures, and
achieve the benefits it expects therefrom; the operation of new
manufacturing capabilities; the Company’s ability to achieve
anticipated cost and energy savings; the availability and pricing
of raw materials, energy and transportation, including the impact
of potential changes in tariffs and escalating trade wars, and the
Company’s ability to pass raw material, energy and transportation
price increases and surcharges through to customers or otherwise
manage these pricing risks; the costs of labor; the effects of
inflation, fluctuations in consumer demand, volume softness,
customer destocking and other macroeconomic factors on the Company
and the industries in which it operates and that it serves; the
Company’s ability to meet its goals relating to sustainability and
reduction of greenhouse gas emissions; the Company’s ability to
return cash to shareholders and create long-term value; and the
other risks, uncertainties and assumptions discussed in the
Company’s filings with the Securities and Exchange Commission,
including its most recent reports on Forms 10-K and 10-Q,
particularly under the heading “Risk Factors.” 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.
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 Securities
and Exchange Commission’s rules or the New York Stock Exchange
Listing Standards. These references are not intended to, and do
not, incorporate the contents of our website by reference into this
release.
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) |
(Dollars and shares in thousands except per share) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
Net sales |
|
$ |
1,705,290 |
|
|
$ |
1,913,332 |
|
|
$ |
3,435,073 |
|
|
$ |
3,684,314 |
|
Cost of sales |
|
|
1,347,972 |
|
|
|
1,526,331 |
|
|
|
2,703,327 |
|
|
|
2,925,748 |
|
Gross profit |
|
|
357,318 |
|
|
|
387,001 |
|
|
|
731,746 |
|
|
|
758,566 |
|
Selling, general, and
administrative expenses |
|
|
170,773 |
|
|
|
178,962 |
|
|
|
358,749 |
|
|
|
369,323 |
|
Restructuring/Asset impairment
charges |
|
|
6,057 |
|
|
|
10,563 |
|
|
|
34,871 |
|
|
|
22,705 |
|
Gain on divestiture of
business and other assets |
|
|
7,371 |
|
|
|
— |
|
|
|
79,381 |
|
|
|
— |
|
Operating profit |
|
|
187,859 |
|
|
|
197,476 |
|
|
|
417,507 |
|
|
|
366,538 |
|
Non-operating pension
costs |
|
|
3,342 |
|
|
|
1,677 |
|
|
|
7,000 |
|
|
|
3,002 |
|
Net interest expense |
|
|
32,340 |
|
|
|
23,161 |
|
|
|
65,010 |
|
|
|
42,226 |
|
Income before income
taxes |
|
|
152,177 |
|
|
|
172,638 |
|
|
|
345,497 |
|
|
|
321,310 |
|
Provision for income
taxes |
|
|
40,740 |
|
|
|
44,599 |
|
|
|
87,652 |
|
|
|
79,888 |
|
Income before equity in
earnings of affiliates |
|
|
111,437 |
|
|
|
128,039 |
|
|
|
257,845 |
|
|
|
241,422 |
|
Equity in earnings of
affiliates, net of tax |
|
|
3,312 |
|
|
|
3,728 |
|
|
|
5,168 |
|
|
|
5,952 |
|
Net income |
|
|
114,749 |
|
|
|
131,767 |
|
|
|
263,013 |
|
|
|
247,374 |
|
Net income attributable to
noncontrolling interests |
|
|
(100 |
) |
|
|
(95 |
) |
|
|
(45 |
) |
|
|
(369 |
) |
Net income attributable to
Sonoco |
|
$ |
114,649 |
|
|
$ |
131,672 |
|
|
$ |
262,968 |
|
|
$ |
247,005 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – diluted |
|
|
98,872 |
|
|
|
98,686 |
|
|
|
98,740 |
|
|
|
98,621 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common
share |
|
$ |
1.16 |
|
|
$ |
1.33 |
|
|
$ |
2.66 |
|
|
$ |
2.50 |
|
Dividends per common
share |
|
$ |
0.51 |
|
|
$ |
0.49 |
|
|
$ |
1.00 |
|
|
$ |
0.94 |
|
|
FINANCIAL SEGMENT INFORMATION (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
July 2, 2023 |
|
July 3, 2022 |
|
July 2, 2023 |
|
July 3, 2022 |
Net sales: |
|
|
|
|
|
|
|
|
Consumer Packaging |
$ |
923,605 |
|
|
$ |
989,982 |
|
|
$ |
1,832,883 |
|
|
$ |
1,858,081 |
|
|
Industrial Paper
Packaging |
|
585,143 |
|
|
|
727,402 |
|
|
|
1,200,998 |
|
|
|
1,426,529 |
|
|
All Other |
|
196,542 |
|
|
|
195,948 |
|
|
|
401,192 |
|
|
|
399,704 |
|
|
Net sales |
$ |
1,705,290 |
|
|
$ |
1,913,332 |
|
|
$ |
3,435,073 |
|
|
$ |
3,684,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit: |
|
|
|
|
|
|
|
|
Consumer Packaging |
$ |
95,225 |
|
|
$ |
139,421 |
|
|
$ |
187,045 |
|
|
$ |
313,030 |
|
|
Industrial Paper
Packaging |
|
87,040 |
|
|
|
94,201 |
|
|
|
181,407 |
|
|
|
166,862 |
|
|
All Other |
|
28,675 |
|
|
|
16,529 |
|
|
|
55,908 |
|
|
|
31,053 |
|
|
Corporate |
|
|
|
|
|
|
|
|
Restructuring/Asset impairment charges |
|
(6,057 |
) |
|
|
(10,563 |
) |
|
|
(34,871 |
) |
|
|
(22,705 |
) |
|
Amortization of acquisition intangibles |
|
(20,539 |
) |
|
|
(20,871 |
) |
|
|
(41,703 |
) |
|
|
(39,671 |
) |
|
Other income/(charges), net |
|
3,515 |
|
|
|
(21,241 |
) |
|
|
69,721 |
|
|
|
(82,031 |
) |
|
Operating profit |
$ |
187,859 |
|
|
$ |
197,476 |
|
|
$ |
417,507 |
|
|
$ |
366,538 |
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
Six Months Ended |
|
|
July 2, 2023 |
|
July 3, 2022 |
|
|
|
|
|
Net income |
|
$ |
263,013 |
|
|
$ |
247,374 |
|
Net (gains)/losses on asset
impairment, disposition of assets and divestiture of a
business |
|
|
(58,769 |
) |
|
|
9,035 |
|
Depreciation, depletion and
amortization |
|
|
163,817 |
|
|
|
151,944 |
|
Pension and postretirement
plan (contributions), net of non-cash expense |
|
|
1,039 |
|
|
|
(26,017 |
) |
Changes in working
capital |
|
|
910 |
|
|
|
(258,479 |
) |
Changes in tax accounts |
|
|
3,327 |
|
|
|
39,104 |
|
Other operating activity |
|
|
(24,754 |
) |
|
|
21,504 |
|
Net cash provided by
operating activities |
|
$ |
348,583 |
|
|
$ |
184,465 |
|
|
|
|
|
|
Purchases of property, plant
and equipment, net |
|
|
(89,837 |
) |
|
|
(144,119 |
) |
Proceeds from divestiture of
business |
|
|
13,839 |
|
|
|
— |
|
Cost of acquisitions, net of
cash acquired |
|
|
— |
|
|
|
(1,333,769 |
) |
Net debt (repayments)/
borrowings |
|
|
(76,240 |
) |
|
|
1,427,995 |
|
Cash dividends paid |
|
|
(97,689 |
) |
|
|
(91,525 |
) |
Payments for share
repurchases |
|
|
(10,602 |
) |
|
|
(3,984 |
) |
Other, including effects of
exchange rates on cash |
|
|
3,724 |
|
|
|
(20,571 |
) |
Purchase of noncontrolling
interest |
|
|
— |
|
|
|
(14,474 |
) |
Net increase in cash and cash
equivalents |
|
|
91,778 |
|
|
|
4,018 |
|
Cash and cash equivalents at
beginning of period |
|
|
227,438 |
|
|
|
170,978 |
|
Cash and cash equivalents at
end of period |
|
$ |
319,216 |
|
|
$ |
174,996 |
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(Dollars in thousands) |
|
|
July 2, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
$ |
319,216 |
|
|
$ |
227,438 |
|
|
Trade accounts receivable, net
of allowances |
|
888,190 |
|
|
|
862,712 |
|
|
Other receivables |
|
122,061 |
|
|
|
99,492 |
|
|
Inventories |
|
942,542 |
|
|
|
1,095,558 |
|
|
Prepaid expenses |
|
87,867 |
|
|
|
76,054 |
|
|
|
|
2,359,876 |
|
|
|
2,361,254 |
|
Property, plant
and equipment, net |
|
1,747,119 |
|
|
|
1,710,399 |
|
Right of use
asset-operating leases |
|
287,154 |
|
|
|
296,781 |
|
Goodwill |
|
1,681,969 |
|
|
|
1,675,311 |
|
Other intangible
assets, net |
|
694,762 |
|
|
|
741,598 |
|
Other assets |
|
278,108 |
|
|
|
267,597 |
|
|
|
$ |
7,048,988 |
|
|
$ |
7,052,940 |
|
Liabilities and Shareholders’ Equity |
|
|
|
Current
Liabilities: |
|
|
|
|
Payable to suppliers and other
payables |
$ |
1,064,877 |
|
|
$ |
1,224,556 |
|
|
Notes payable and current
portion of long-term debt |
|
437,210 |
|
|
|
502,440 |
|
|
Accrued taxes |
|
17,490 |
|
|
|
16,905 |
|
|
|
|
1,519,577 |
|
|
|
1,743,901 |
|
Long-term debt,
net of current portion |
|
2,716,253 |
|
|
|
2,719,783 |
|
Noncurrent
operating lease liabilities |
|
242,383 |
|
|
|
250,994 |
|
Pension and other
postretirement benefits |
|
121,524 |
|
|
|
120,084 |
|
Deferred income
taxes and other |
|
149,929 |
|
|
|
145,381 |
|
Total equity |
|
2,299,322 |
|
|
|
2,072,797 |
|
|
|
$ |
7,048,988 |
|
|
$ |
7,052,940 |
|
|
|
Definition and Reconciliation of
Non-GAAP Financial MeasuresThe Company’s results
determined in accordance with U.S. generally accepted accounting
principles (“GAAP”) are referred to as “as reported” or “GAAP”
results. The Company uses certain financial performance measures,
both internally and externally, that are not in conformity with
GAAP (“non-GAAP financial measures”) to assess and communicate the
financial performance of the Company. These non-GAAP financial
measures reflect the Company’s GAAP operating results adjusted to
remove amounts (including the associated tax effects) relating
to:
- restructuring/asset impairment
charges1;
- acquisition/divestiture-related costs;
- gains or losses from the divestiture of businesses or other
assets;
- losses from the early extinguishment of debt;
- non-operating pension costs;
- amortization expense on acquisition intangibles;
- changes in last-in, first-out (“LIFO”) inventory reserves;
- certain income tax events and adjustments; and
- other items, if any.
1 Restructuring/asset impairment charges are a
recurring item as Sonoco’s restructuring programs usually require
several years to fully implement and the Company is continually
seeking to take actions that could enhance its efficiency. Although
recurring, these charges are subject to significant fluctuations
from period to period due to the varying levels of restructuring
activity, the inherent imprecision in the estimates used to
recognize the impairment of assets, and the wide variety of costs
and taxes associated with severance and termination benefits in the
countries in which the restructuring actions occur.
The Company’s management believes the exclusion
of these items improves the period-to-period comparability and
analysis of the underlying financial performance of the business.
Non-GAAP figures previously identified by the term “Base” are now
identified using the term “Adjusted,” for example “Adjusted
Operating Profit,” “Adjusted Net Income,” and “Adjusted EPS.”
In addition to the “Adjusted” results described
above, the Company also uses Adjusted EBITDA and Adjusted EBITDA
Margin. Adjusted EBITDA is defined as net income excluding the
following: interest expense; interest income; provision for income
taxes; depreciation, depletion and amortization expense;
non-operating pension costs; net income/(loss) attributable to
noncontrolling interests; restructuring/asset impairment charges;
changes in LIFO inventory reserves; gains/losses from the
divestiture of businesses or other assets;
acquisition/divestiture-related costs; derivative (gains)/losses;
and other non-GAAP adjustments, if any, that may arise from time to
time. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided
by net sales.
The Company’s non-GAAP financial measures are
not calculated in accordance with, nor are they an alternative for,
measures conforming to generally accepted accounting principles,
and they may be different from non-GAAP financial measures used by
other companies. In addition, these non-GAAP financial measures are
not based on any comprehensive set of accounting rules or
principles.
The Company presents these non-GAAP financial
measures to provide investors with information to evaluate Sonoco’s
operating results in a manner similar to how management evaluates
business performance. The Company consistently applies its non-GAAP
financial measures presented herein and uses them for internal
planning and forecasting purposes, to evaluate its ongoing
operations, and to evaluate the ultimate performance of management
and each business unit against plans/forecasts. In addition, these
same non-GAAP financial measures are used in determining incentive
compensation for the entire management team and in providing
earnings guidance to the investing community.
Material limitations associated with the use of
such measures include that they do not reflect all period costs
included in operating expenses and may not be comparable with
similarly named financial measures of other companies. Furthermore,
the calculations of these non-GAAP financial 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 any limitations in such
non-GAAP financial measures, management believes that it is useful
in evaluating the Company’s results to review both GAAP
information, which includes all of the items impacting financial
results, and the related non-GAAP financial measures that exclude
certain elements, as described above. Further, Sonoco management
does not, nor does it suggest that investors should, consider any
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP.
Whenever reviewing a non-GAAP financial measure, investors are
encouraged to review the related reconciliation to understand how
it differs from the most directly comparable GAAP measure.
Whenever Sonoco uses a non-GAAP financial
measure it provides a reconciliation of the non-GAAP financial
measure to the most directly comparable GAAP financial measure.
Investors are encouraged to review and consider these
reconciliations. See “Guidance” above for more information
regarding the Company’s guidance.
Adjusted Operating Profit, Adjusted
Income Before Income Taxes, Adjusted Provision for Income Taxes,
Adjusted Net Income Attributable to Sonoco and Adjusted Diluted
EPS
The following tables reconcile the Company’s non-GAAP financial
measures to their most directly comparable GAAP financial measures
for each of the periods presented:
|
|
For the three-month period ended July 2, 2023 |
Dollars in thousands,
except per share data |
|
OperatingProfit |
IncomeBeforeIncome Taxes |
Provision forIncome Taxes |
Net IncomeAttributableto Sonoco |
Diluted EPS |
As Reported |
|
$ |
187,859 |
|
$ |
152,177 |
|
$ |
40,740 |
|
$ |
114,649 |
|
$ |
1.16 |
|
Acquisition/Divestiture-related costs |
|
|
4,532 |
|
|
4,532 |
|
|
990 |
|
|
3,542 |
|
|
0.03 |
|
Changes in LIFO inventory reserves |
|
|
(1,575 |
) |
|
(1,575 |
) |
|
(395 |
) |
|
(1,180 |
) |
|
(0.01 |
) |
Amortization of acquisition intangibles |
|
|
20,539 |
|
|
20,539 |
|
|
4,992 |
|
|
15,547 |
|
|
0.16 |
|
Restructuring/Asset impairment charges |
|
|
6,057 |
|
|
6,057 |
|
|
1,325 |
|
|
4,669 |
|
|
0.05 |
|
Gain on divestiture of business and sale of other assets |
|
|
(7,371 |
) |
|
(7,371 |
) |
|
(1,825 |
) |
|
(5,546 |
) |
|
(0.06 |
) |
Non-operating pension costs |
|
|
— |
|
|
3,342 |
|
|
828 |
|
|
2,514 |
|
|
0.03 |
|
Net gain from derivatives |
|
|
(4,288 |
) |
|
(4,288 |
) |
|
(1,070 |
) |
|
(3,219 |
) |
|
(0.04 |
) |
Other adjustments |
|
|
5,187 |
|
|
5,187 |
|
|
212 |
|
|
4,975 |
|
|
0.06 |
|
Total adjustments |
|
$ |
23,081 |
|
$ |
26,423 |
|
$ |
5,057 |
|
$ |
21,302 |
|
$ |
0.22 |
|
Adjusted |
|
$ |
210,940 |
|
$ |
178,600 |
|
$ |
45,797 |
|
$ |
135,951 |
|
$ |
1.38 |
|
Due to rounding,
individual items may not sum appropriately. |
|
|
For the three-month period ended July 3, 2022 |
Dollars in thousands,
except per share data |
|
OperatingProfit |
IncomeBeforeIncome Taxes |
Provision forIncome Taxes |
Net IncomeAttributableto Sonoco |
Diluted EPS |
As Reported |
|
$ |
197,476 |
|
$ |
172,638 |
|
$ |
44,599 |
|
$ |
131,672 |
|
$ |
1.33 |
|
Acquisition/Divestiture-related costs |
|
|
12,281 |
|
|
12,281 |
|
|
3,009 |
|
|
9,272 |
|
|
0.09 |
|
Changes in LIFO inventory reserves |
|
|
6,340 |
|
|
6,340 |
|
|
1,563 |
|
|
4,777 |
|
|
0.05 |
|
Amortization of acquisition intangibles |
|
|
20,871 |
|
|
20,871 |
|
|
5,099 |
|
|
15,772 |
|
|
0.16 |
|
Restructuring/Asset impairment charges |
|
|
10,563 |
|
|
10,563 |
|
|
842 |
|
|
9,760 |
|
|
0.10 |
|
Non-operating pension costs |
|
|
— |
|
|
1,677 |
|
|
461 |
|
|
1,216 |
|
|
0.01 |
|
Net loss from derivatives |
|
|
2,802 |
|
|
2,802 |
|
|
718 |
|
|
2,084 |
|
|
0.02 |
|
Other adjustments |
|
|
(182 |
) |
|
(318 |
) |
|
423 |
|
|
(741 |
) |
|
— |
|
Total adjustments |
|
$ |
52,675 |
|
$ |
54,216 |
|
$ |
12,115 |
|
$ |
42,140 |
|
$ |
0.43 |
|
Adjusted |
|
$ |
250,151 |
|
$ |
226,854 |
|
$ |
56,714 |
|
$ |
173,812 |
|
$ |
1.76 |
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
|
|
|
For the six-month period ended July 2, 2023 |
Dollars in thousands,
except per share data |
|
OperatingProfit |
IncomeBeforeIncome Taxes |
Provision forIncome Taxes |
Net IncomeAttributableto Sonoco |
Diluted EPS |
As Reported |
|
$ |
417,507 |
|
$ |
345,497 |
|
$ |
87,652 |
|
$ |
262,968 |
|
$ |
2.66 |
|
Acquisition/Divestiture-related costs |
|
|
9,720 |
|
|
9,720 |
|
|
2,270 |
|
|
7,450 |
|
|
0.08 |
|
Changes in LIFO inventory reserves |
|
|
(7,000 |
) |
|
(7,000 |
) |
|
(1,749 |
) |
|
(5,252 |
) |
|
(0.05 |
) |
Amortization of acquisition intangibles |
|
|
41,703 |
|
|
41,703 |
|
|
10,119 |
|
|
31,584 |
|
|
0.32 |
|
Restructuring/Asset impairment charges |
|
|
34,871 |
|
|
34,871 |
|
|
7,959 |
|
|
26,683 |
|
|
0.27 |
|
Gain on divestiture of business and sale of other assets |
|
|
(79,381 |
) |
|
(79,381 |
) |
|
(18,947 |
) |
|
(60,434 |
) |
|
(0.61 |
) |
Non-operating pension costs |
|
|
— |
|
|
7,000 |
|
|
1,737 |
|
|
5,263 |
|
|
0.05 |
|
Net loss from derivatives |
|
|
1,797 |
|
|
1,797 |
|
|
448 |
|
|
1,348 |
|
|
0.01 |
|
Other adjustments |
|
|
5,144 |
|
|
5,144 |
|
|
1,167 |
|
|
3,979 |
|
|
0.04 |
|
Total adjustments |
|
$ |
6,854 |
|
$ |
13,854 |
|
$ |
3,004 |
|
$ |
10,621 |
|
$ |
0.11 |
|
Adjusted |
|
$ |
424,361 |
|
$ |
359,351 |
|
$ |
90,656 |
|
$ |
273,589 |
|
$ |
2.77 |
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
|
|
For the six-month period ended July 3, 2022 |
Dollars in thousands,
except per share data |
|
OperatingProfit |
IncomeBeforeIncome Taxes |
Provision forIncome Taxes |
Net IncomeAttributableto Sonoco |
Diluted EPS |
As Reported |
|
$ |
366,538 |
|
$ |
321,310 |
|
$ |
79,888 |
|
$ |
247,005 |
|
$ |
2.50 |
|
Acquisition/Divestiture-related costs |
|
|
60,633 |
|
|
60,633 |
|
|
14,764 |
|
|
45,869 |
|
|
0.47 |
|
Changes in LIFO inventory reserves |
|
|
25,390 |
|
|
25,390 |
|
|
6,396 |
|
|
18,994 |
|
|
0.19 |
|
Amortization of acquisition intangibles |
|
|
39,671 |
|
|
39,671 |
|
|
9,728 |
|
|
29,942 |
|
|
0.30 |
|
Restructuring/Asset impairment charges |
|
|
22,705 |
|
|
22,705 |
|
|
2,477 |
|
|
20,329 |
|
|
0.21 |
|
Non-operating pension costs |
|
|
— |
|
|
3,002 |
|
|
844 |
|
|
2,157 |
|
|
0.02 |
|
Net gain from derivatives |
|
|
(3,795 |
) |
|
(3,795 |
) |
|
(955 |
) |
|
(2,838 |
) |
|
(0.03 |
) |
Other adjustments |
|
|
(198 |
) |
|
(334 |
) |
|
4,619 |
|
|
(4,953 |
) |
|
(0.05 |
) |
Total adjustments |
|
$ |
144,406 |
|
$ |
147,272 |
|
$ |
37,873 |
|
$ |
109,500 |
|
$ |
1.11 |
|
Adjusted |
|
$ |
510,944 |
|
$ |
468,582 |
|
$ |
117,761 |
|
$ |
356,505 |
|
$ |
3.61 |
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
|
|
Three Months Ended |
Dollars in
thousands |
July 2, 2023 |
July 3, 2022 |
|
|
|
Net income attributable to Sonoco |
$ |
114,649 |
|
$ |
131,672 |
|
Adjustments: |
|
|
Interest expense |
|
34,284 |
|
|
23,947 |
|
Interest income |
|
(1,944 |
) |
|
(786 |
) |
Provision for income taxes |
|
40,740 |
|
|
44,599 |
|
Depreciation, depletion, and amortization |
|
81,679 |
|
|
78,629 |
|
Non-operating pension costs |
|
3,342 |
|
|
1,677 |
|
Net income attributable to noncontrolling interests |
|
100 |
|
|
95 |
|
Restructuring/Asset impairment charges |
|
6,057 |
|
|
10,563 |
|
Changes in LIFO inventory reserves |
|
(1,575 |
) |
|
6,340 |
|
Gain from divestiture of business and sale of other assets |
|
(7,371 |
) |
|
— |
|
Acquisition/Divestiture-related costs |
|
4,532 |
|
|
12,281 |
|
Net (gain)/loss from derivatives |
|
(4,288 |
) |
|
2,802 |
|
Other non-GAAP adjustments |
|
5,187 |
|
|
(182 |
) |
Adjusted
EBITDA |
$ |
275,392 |
|
$ |
311,637 |
|
|
|
|
Net Sales |
$ |
1,705,290 |
|
$ |
1,913,332 |
|
Adjusted EBITDA Margin |
|
16.1 |
% |
|
16.3 |
% |
|
|
|
|
|
|
|
Segment results viewed by Company’s management
to evaluate segment performance do not include restructuring/asset
impairment charges, amortization of acquisition intangibles,
acquisition/divestiture-related costs, changes in LIFO inventory
reserves, gains/losses from the sale of businesses, or certain
other items, if any, the exclusion of which the Company believes
improves the comparability and analysis of the ongoing operating
performance of the business. Accordingly, the term “segment
operating profit” is defined as the segment’s portion of “operating
profit” excluding those items. All other general corporate expenses
have been allocated as operating costs to each of the Company’s
reportable segments and All Other.
The Company does not calculate net income by
segment; therefore, Segment Adjusted EBITDA is reconciled to the
closest GAAP measure of segment profitability, Segment Operating
Profit, which is the measure of segment profit or loss in
accordance with Accounting Standards Codification 280 - Segment
Reporting, as prescribed by the Financial Accounting Standards
Board.
Segment
Adjusted EBITDA and All Other Adjusted EBITDA
Reconciliation |
Three-month period ended July 2, 2023 |
Dollars in thousands |
ConsumerPackagingsegment |
IndustrialPaperPackagingsegment |
All Other |
Corporate |
Total |
Segment and Total Operating Profit |
$ |
95,225 |
|
$ |
87,040 |
|
$ |
28,675 |
|
$ |
(23,081 |
) |
$ |
187,859 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion and amortization1 |
|
29,955 |
|
|
25,008 |
|
|
6,177 |
|
|
20,539 |
|
|
81,679 |
|
Equity in earnings of affiliates, net of tax |
|
134 |
|
|
3,178 |
|
|
— |
|
|
— |
|
|
3,312 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
— |
|
|
— |
|
|
6,057 |
|
|
6,057 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
— |
|
|
— |
|
|
(1,575 |
) |
|
(1,575 |
) |
Acquisition/Divestiture-related costs4 |
|
— |
|
|
— |
|
|
— |
|
|
4,532 |
|
|
4,532 |
|
Gain from divestiture of business and other assets5 |
|
— |
|
|
— |
|
|
— |
|
|
(7,371 |
) |
|
(7,371 |
) |
Net gains from derivatives6 |
|
— |
|
|
— |
|
|
— |
|
|
(4,288 |
) |
|
(4,288 |
) |
Other non-GAAP adjustments |
|
— |
|
|
— |
|
|
— |
|
|
5,187 |
|
|
5,187 |
|
Segment Adjusted
EBITDA |
$ |
125,314 |
|
$ |
115,226 |
|
$ |
34,852 |
|
$ |
— |
|
$ |
275,392 |
|
|
|
|
|
|
|
Net Sales |
$ |
923,605 |
|
$ |
585,143 |
|
$ |
196,542 |
|
|
|
Segment Operating Profit
Margin |
|
10.3 |
% |
|
14.9 |
% |
|
14.6 |
% |
|
|
Segment Adjusted EBITDA
Margin |
|
13.6 |
% |
|
19.7 |
% |
|
17.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$14,205, the Industrial segment of $2,565, and All Other of
$3,769.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $1,928, the
Industrial segment of $1,987, and All Other of $2,952.3 Included in
Corporate are changes in LIFO inventory reserves associated with
the Industrial segment of $(1,575).4 Included in Corporate are
Acquisition/Divestiture-related costs associated with the Consumer
segment of $112 and the Industrial segment of $60.5 Included in
Corporate is the gain from the sale of the Company’s U.S. BulkSak
businesses associated with the Industrial segment.6 Included in
Corporate are net gains on derivatives associated with the Consumer
segment of $(600), the Industrial segment of $(2,835), and All
Other of $(853).
|
|
|
|
|
|
Segment
Adjusted EBITDA and All Other Adjusted EBITDA
Reconciliation |
Three-month period ended July 3, 2022 |
Dollars in thousands |
ConsumerPackagingsegment |
IndustrialPaperPackagingsegment |
All Other |
Corporate |
Total |
Segment and Total Operating Profit |
$ |
139,421 |
|
$ |
94,201 |
|
$ |
16,529 |
|
$ |
(52,675 |
) |
$ |
197,476 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion, and amortization1 |
|
28,323 |
|
|
23,153 |
|
|
6,282 |
|
|
20,871 |
|
|
78,629 |
|
Equity in earnings of affiliates, net of tax |
|
47 |
|
|
3,681 |
|
|
— |
|
|
— |
|
|
3,728 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
— |
|
|
— |
|
|
10,563 |
|
|
10,563 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
— |
|
|
— |
|
|
6,340 |
|
|
6,340 |
|
Acquisition/Divestiture-related costs4 |
|
— |
|
|
— |
|
|
— |
|
|
12,281 |
|
|
12,281 |
|
Net losses from derivatives5 |
|
— |
|
|
— |
|
|
— |
|
|
2,802 |
|
|
2,802 |
|
Other non-GAAP adjustments |
|
— |
|
|
— |
|
|
— |
|
|
(182 |
) |
|
(182 |
) |
Segment Adjusted
EBITDA |
$ |
167,791 |
|
$ |
121,035 |
|
$ |
22,811 |
|
$ |
— |
|
$ |
311,637 |
|
|
|
|
|
|
|
Net Sales |
$ |
989,982 |
|
$ |
727,402 |
|
$ |
195,948 |
|
|
|
Segment Operating Profit
Margin |
|
14.1 |
% |
|
13.0 |
% |
|
8.4 |
% |
|
|
Segment Adjusted EBITDA
Margin |
|
16.9 |
% |
|
16.6 |
% |
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is amortization of
acquisition intangibles associated with the Consumer segment - of
$14,423, the Industrial segment of $2,038, and All Other of
$4,410.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $2,798, the
Industrial segment of $4,459, and All Other of $(495).3 Included in
Corporate are changes in LIFO inventory reserves associated with
the Consumer segment - of $4,150 and the Industrial segment of
$2,190.4 Included in Corporate are Acquisition/Divestiture-related
costs associated with the Consumer segment of $10,490.5 Included in
Corporate are net losses on derivatives associated with the
Consumer segment of $406, the Industrial segment of $1,819, and All
Other of $577.
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
|
|
Six Months Ended |
Dollars in
thousands |
July 2, 2023 |
July 3, 2022 |
|
|
|
Net income attributable to Sonoco |
$ |
262,968 |
|
$ |
247,005 |
|
Adjustments: |
|
|
Interest expense |
|
68,516 |
|
|
44,528 |
|
Interest income |
|
(3,506 |
) |
|
(2,302 |
) |
Provision for income taxes |
|
87,652 |
|
|
79,888 |
|
Depreciation, depletion, and amortization |
|
163,817 |
|
|
151,944 |
|
Non-operating pension costs |
|
7,000 |
|
|
3,002 |
|
Net income attributable to noncontrolling interests |
|
45 |
|
|
369 |
|
Restructuring/Asset impairment charges |
|
34,871 |
|
|
22,705 |
|
Changes in LIFO inventory reserves |
|
(7,000 |
) |
|
25,390 |
|
Gain from divestiture of business and sale of other assets |
|
(79,381 |
) |
|
— |
|
Acquisition/Divestiture-related costs |
|
9,720 |
|
|
60,633 |
|
Net loss/(gain) from derivatives |
|
1,796 |
|
|
(3,794 |
) |
Other non-GAAP adjustments |
|
5,144 |
|
|
(198 |
) |
Adjusted
EBITDA |
$ |
551,642 |
|
$ |
629,170 |
|
|
|
|
Net Sales |
$ |
3,435,073 |
|
$ |
3,684,314 |
|
Net Income Margin |
|
6.7 |
% |
|
6.9 |
% |
Adjusted EBITDA Margin |
|
16.1 |
% |
|
17.1 |
% |
|
|
|
|
|
|
|
The following tables reconcile Segment Operating Profit, the
closest GAAP measure of profitability, to Segment Adjusted
EBITDA.
Segment
Adjusted EBITDA and All Other Adjusted EBITDA
Reconciliation |
For the
Six Months Ended July 2, 2023 |
Dollars in thousands |
ConsumerPackagingsegment |
IndustrialPaperPackagingsegment |
All Other |
Corporate |
Total |
Segment and Total Operating Profit |
$ |
187,045 |
|
$ |
181,407 |
|
$ |
55,908 |
|
$ |
(6,853 |
) |
$ |
417,507 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion and
amortization1 |
|
59,994 |
|
|
49,886 |
|
|
12,234 |
|
|
41,703 |
|
|
163,817 |
|
Equity in earnings of
affiliates, net of tax |
|
209 |
|
|
4,959 |
|
|
— |
|
|
— |
|
|
5,168 |
|
Restructuring/Asset impairment
charges2 |
|
— |
|
|
— |
|
|
— |
|
|
34,871 |
|
|
34,871 |
|
Changes in LIFO inventory
reserves3 |
|
— |
|
|
— |
|
|
— |
|
|
(7,000 |
) |
|
(7,000 |
) |
Acquisition/Divestiture-related costs4 |
|
— |
|
|
— |
|
|
— |
|
|
9,720 |
|
|
9,720 |
|
Gains from divestiture of
business and other assets5 |
|
— |
|
|
— |
|
|
— |
|
|
(79,381 |
) |
|
(79,381 |
) |
Net losses from
derivatives6 |
|
— |
|
|
— |
|
|
— |
|
|
1,796 |
|
|
1,796 |
|
Other non-GAAP
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
5,144 |
|
|
5,144 |
|
Segment Adjusted
EBITDA |
$ |
247,248 |
|
$ |
236,252 |
|
$ |
68,142 |
|
$ |
— |
|
$ |
551,642 |
|
|
|
|
|
|
|
Net Sales |
$ |
1,832,883 |
|
$ |
1,200,998 |
|
$ |
401,192 |
|
|
|
Segment Operating Profit
Margin |
|
10.2 |
% |
|
15.1 |
% |
|
13.9 |
% |
|
|
Segment Adjusted EBITDA
Margin |
|
13.5 |
% |
|
19.7 |
% |
|
17.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$28,633, the Industrial segment of $5,499, and All Other of
$7,571.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $3,504, the
Industrial segment of $26,531, and All Other of $4,109.3 Included
in Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $(6,103) and the Industrial segment of
$(897).4 Included in Corporate are Acquisition/Divestiture-related
costs associated with the Consumer segment of $892 and the
Industrial segment of $349.5 Included in Corporate are gains from
the divestiture of business and other assets associated with the
sale of the Company’s timberland properties in the amount of
$(60,945), the sale of its S3 business of in the amount of
$(11,065), and the sale of its U.S. BulkSak businesses of $(7,371),
all of which were associated with the Industrial segment.6 Included
in Corporate are losses on derivatives associated with the Consumer
segment of $274, the Industrial segment of $1,133, and All Other of
$389.
|
|
|
|
|
|
Segment
Adjusted EBITDA and All Other Adjusted EBITDA
Reconciliation |
For the
Six Months Ended July 3, 2022 |
Dollars in thousands |
ConsumerPackagingsegment |
IndustrialPaperPackagingsegment |
All Other |
Corporate |
Total |
Segment and Total Operating Profit |
$ |
313,030 |
|
$ |
166,862 |
|
$ |
31,053 |
|
$ |
(144,407 |
) |
$ |
366,538 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion, and amortization1 |
|
54,059 |
|
|
45,777 |
|
|
12,437 |
|
|
39,671 |
|
|
151,944 |
|
Equity in earnings of affiliates, net of tax |
|
9 |
|
|
5,943 |
|
|
— |
|
|
— |
|
|
5,952 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
— |
|
|
— |
|
|
22,705 |
|
|
22,705 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
— |
|
|
— |
|
|
25,390 |
|
|
25,390 |
|
Acquisition/Divestiture-related costs4 |
|
— |
|
|
— |
|
|
— |
|
|
60,633 |
|
|
60,633 |
|
Net gains from derivatives5 |
|
— |
|
|
— |
|
|
— |
|
|
(3,794 |
) |
|
(3,794 |
) |
Other non-GAAP adjustments |
|
— |
|
|
— |
|
|
— |
|
|
(198 |
) |
|
(198 |
) |
Segment Adjusted
EBITDA |
$ |
367,098 |
|
$ |
218,582 |
|
$ |
43,490 |
|
$ |
— |
|
$ |
629,170 |
|
|
|
|
|
|
|
Net Sales |
$ |
1,858,081 |
|
$ |
1,426,529 |
|
$ |
399,704 |
|
|
|
Segment Operating Profit
Margin |
|
16.8 |
% |
|
11.7 |
% |
|
7.8 |
% |
|
|
Segment Adjusted EBITDA
Margin |
|
19.8 |
% |
|
15.3 |
% |
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$26,612, the Industrial segment of $4,125, and All Other of
$8,934.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $5,109, the
Industrial segment of $11,520, and All Other of $(417).3 Included
in Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $24,242 and the Industrial segment of
$1,148.4 Included in Corporate are Acquisition/Divestiture-related
costs associated with the Consumer segment of $37,184 and the
Industrial segment of $1,066.5 Included in Corporate are net gains
on derivatives associated with the Consumer segment of $(550), the
Industrial segment of $(2,462), and All Other of $(782).
Free Cash FlowThe Company uses
the non-GAAP financial measure of “free cash flow,” which it
defines as cash flow from operations minus net capital
expenditures. Net capital expenditures are defined as capital
expenditures minus proceeds from the disposition of capital assets.
Free cash flow may not represent the amount of cash flow available
for general discretionary use because it excludes non-discretionary
expenditures, such as mandatory debt repayments and required
settlements of recorded and/or contingent liabilities not reflected
in cash flow from operations.
|
Six Months Ended |
FREE CASH
FLOW |
July 2, 2023 |
|
July 3, 2022 |
|
|
|
|
Net cash provided by operating activities |
$ |
348,583 |
|
|
$ |
184,465 |
|
Purchase of property, plant
and equipment, net |
|
(89,837 |
) |
|
|
(144,119 |
) |
Free Cash Flow |
$ |
258,746 |
|
|
$ |
40,346 |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
Estimated Low End |
|
Estimated High End |
FREE CASH
FLOW |
December 31, 2023 |
|
December 31, 2023 |
Net cash provided by operating
activities |
$ |
925,000 |
|
|
$ |
975,000 |
|
Purchase of property, plant
and equipment, net |
|
(305,000 |
) |
|
|
(255,000 |
) |
Free Cash Flow |
$ |
620,000 |
|
|
$ |
720,000 |
|
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