Sonoco Products Company (“Sonoco” or the “Company”) (NYSE: SON),
one of the largest sustainable global packaging companies, today
reported financial results for its third quarter ended
October 1, 2023.
Summary
- Sonoco achieved fully diluted
earnings per share of $1.32 and Adjusted earnings per share
(diluted) of $1.46
- Generated sequential growth in
Sales, Net Income, and Adjusted EBITDA and improved Net Income
Margin and Adjusted EBITDA Margin to 7.6% and 16.4%,
respectively.
- Continued near record results in
the flexible packaging and the rigid paper container businesses in
the Consumer Packaging (“Consumer”) and Industrial Paper Packaging
(“Industrial”) segments
- Inflationary pricing pressures
continue to impact year-over-year demand in the Consumer
segment
- Generated $617 million of operating
cash flow in the first nine months of 2023 due to strong GAAP Net
Income and disciplined working capital management
- Raised full-year Adjusted EPS and
Adjusted EBITDA guidance based on improved productivity and cost
controls
- Lowered full-year operating cash
flow and free cash flow guidance based on lowered operating cash
flow and lower capital expenses
- Closed the previously announced
acquisitions of the remaining equity interest in RTS Packaging LLC
(“RTS Packaging”) and a paper mill in Chattanooga, Tennessee and
integration is well underway
|
Third Quarter 2023Consolidated Financial
Results |
(Dollars in millions except per share data) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
GAAP
Results |
October 1, 2023 |
|
October 2, 2022 |
|
Change |
|
|
|
|
|
|
|
Net sales |
$ |
1,710 |
|
|
$ |
1,890 |
|
|
(10 |
)% |
|
Operating profit |
$ |
163 |
|
|
$ |
182 |
|
|
(10 |
)% |
|
Net income attributable to
Sonoco |
$ |
131 |
|
|
$ |
122 |
|
|
7 |
% |
|
EPS (diluted) |
$ |
1.32 |
|
|
$ |
1.24 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Non-GAAP Results(1) |
October 1, 2023 |
|
October 2, 2022 |
|
Change |
|
|
|
|
|
|
|
Adjusted operating profit |
$ |
213 |
|
|
$ |
225 |
|
|
(6 |
)% |
|
Adjusted EBITDA |
$ |
280 |
|
|
$ |
288 |
|
|
(3 |
)% |
|
Adjusted net income
attributable to Sonoco (“Adjusted Earnings”) |
$ |
145 |
|
|
$ |
158 |
|
|
(8 |
)% |
|
Adjusted EPS (diluted) |
$ |
1.46 |
|
|
$ |
1.60 |
|
|
(9 |
)% |
|
|
|
|
|
|
(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 and average selling
prices.
- GAAP operating profit decreased to
$163 million due to lower overall volume and mix and price/cost,
partially offset by higher productivity.
- Achieved net income margin of 7.6%
and Adjusted EBITDA margin of 16.4%.
- Effective tax rates on GAAP and
Adjusted Earnings were 23.6% and 22.7%, respectively, compared with
23.7% and 23.1%, respectively, from the third quarter of the prior
year.
- GAAP net income increased to $131
million for GAAP EPS (diluted) of $1.32.
- Adjusted Earnings decreased to $145
million for Adjusted EPS (diluted) of $1.46.
- Adjusted operating profit and
Adjusted EBITDA declined to $213 million and $280 million,
respectively, due to lower overall volume and mix and price/cost,
partially offset by higher productivity.
“Our third-quarter
results benefited from seasonally higher demand as well
as better than expected productivity and cost management from
our global team,” said Sonoco’s President and CEO, Howard Coker.
“Consumer volumes were lower year over year, but were sequentially
higher across the segment with the exception of metal aerosol cans,
which were below our forecasts on persistent end market demand
softness. In the Industrial segment, volumes were generally as
expected. We closed the RTS Packaging and Chattanooga mill
acquisitions, and integration has progressed to plan. Despite the
continued weak macroeconomic backdrop, we achieved strong profit
margin and operating cash flow in the quarter.”
Third 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 |
October 1, 2023 |
|
October 2, 2022 |
|
Change |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
938 |
|
|
$ |
1,031 |
|
|
(9 |
)% |
|
Segment operating profit |
$ |
112 |
|
|
$ |
128 |
|
|
(12 |
)% |
|
Segment operating profit
margin |
|
12 |
% |
|
|
12 |
% |
|
|
|
|
Segment Adjusted EBITDA1 |
$ |
144 |
|
|
$ |
157 |
|
|
(9 |
)% |
|
Segment Adjusted EBITDA
margin1 |
|
15 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Consumer net sales were $938
million as volumes were primarily impacted by inflationary pricing
pressures within retail along with unfavorable pricing.
- Consumer results benefited from
strong productivity and performance in the flexible packaging,
rigid paper and metal packaging businesses, but this was more than
offset by lower volumes and broadly negative price/cost.
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
Industrial Paper Packaging |
October 1, 2023 |
|
October 2, 2022 |
|
Change |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
580 |
|
|
$ |
661 |
|
|
(12 |
)% |
|
Segment operating profit |
$ |
75 |
|
|
$ |
82 |
|
|
(8 |
)% |
|
Segment operating profit
margin |
|
13 |
% |
|
|
12 |
% |
|
|
|
|
Segment Adjusted EBITDA1 |
$ |
105 |
|
|
$ |
109 |
|
|
(4 |
)% |
|
Segment Adjusted EBITDA
margin1 |
|
18 |
% |
|
|
16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Industrial net sales decreased 12%
to $580 million due to volume and mix weakness in global demand for
paper and converted paper products as well as the absence of sales
related to businesses divested earlier in the year, which was
partially offset by the benefit related to the acquisition of RTS
Packaging and the Chattanooga paper mill during the quarter.
- Strong execution in commercial and
operational excellence resulted in operating profit margin of 13%
and Adjusted EBITDA margin of 18%.
|
|
|
|
|
|
Three Months Ended |
|
|
|
All Other |
October 1, 2023 |
|
October 2, 2022 |
|
Change |
|
|
|
|
|
|
|
Net sales |
$ |
192 |
|
|
$ |
198 |
|
|
(3 |
)% |
|
Operating profit |
$ |
26 |
|
|
$ |
15 |
|
|
66 |
% |
|
Operating profit margin |
|
14 |
% |
|
|
8 |
% |
|
|
|
Adjusted EBITDA1 |
$ |
32 |
|
|
$ |
22 |
|
|
47 |
% |
|
Adjusted EBITDA margin1 |
|
17 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales declined 3% as strategic
pricing actions were more than offset by volume and mix
declines.
- Operating profit and Adjusted
EBITDA improved by 66% and 47%, respectively, primarily due to
positive strategic pricing and strong productivity more than
offsetting lower volumes.
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 $258
million as of October 1, 2023, compared to $227 million as of
December 31, 2022.
- Total debt was $3,255 million as of
October 1, 2023, an increase of $33 million from December 31,
2022.
- On October 1, 2023, the
Company had available liquidity of $1,158 million, including the
undrawn availability under its revolving credit facilities.
- Cash flow from operating activities
for the first nine months of 2023 was $617 million, compared to
$322 million in the same period of 2022.
- Capital expenditures, net of
proceeds from sales of fixed assets, for the first nine months of
2023 were $182 million, compared to $231 million in the same period
last year. Capital expenditures were $255 million and net proceeds
from the sale of our timberland properties were $73 million for the
first nine months of 2023.
- Free cash flow for the first nine
months of 2023 was $435 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 nine
months ended October 1, 2023 increased to $147 million
compared to $139 million for the same period of the prior
year.
Guidance(1)
Fourth Quarter
2023
- Adjusted EPS(2): $1.01 to $1.16
Full Year 2023
- Adjusted EPS(2): $5.25 to $5.40
- Cash flow from operating activities: $850 million to $900
million
- Free cash flow(3): $600 million to $690
million
- Adjusted EBITDA: $1.05 billion to $1.08 billion
Sonoco’s President and CEO, Howard Coker, “For
the fourth quarter, we expect seasonally lower demand volumes and
unfavorable index-based pricing impacts. We are raising full year
Adjusted EPS and Adjusted Earnings guidance based on year-to-date
results and our fourth quarter guidance. Additionally, we are
expecting full year operating cash flow to be $850 - $900 million
and free cash flow to be $600 - $690 million based on lower
operating cash flow and lower capital expenses. We remain focused
on supporting our customers, managing expenses, and continuous
improvement programs as we exit the year.”
(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) Fourth 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, 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, a quantitative reconciliation
of Adjusted EPS guidance has 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,
Wednesday, November 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/BIe853f98da6424ee88b9a95e5c4b84e7c.
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.com843-383-7524
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 320 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 fourth
quarter and full-year 2023 outlook; the Company’s ability to
support its customers and manage expenses; opportunities for
operational improvements; pricing, customer demand and volume
outlook; expected benefits from and integration efforts related to
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 (and integrations thereof), 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 |
|
Nine Months Ended |
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
|
|
|
|
|
|
|
|
Net sales |
$ |
1,710,419 |
|
|
$ |
1,890,216 |
|
|
$ |
5,145,492 |
|
|
$ |
5,574,530 |
|
Cost of sales |
|
1,346,163 |
|
|
|
1,523,070 |
|
|
|
4,049,490 |
|
|
|
4,448,818 |
|
Gross profit |
|
364,256 |
|
|
|
367,146 |
|
|
|
1,096,002 |
|
|
|
1,125,712 |
|
Selling, general, and
administrative expenses |
|
182,672 |
|
|
|
164,552 |
|
|
|
541,421 |
|
|
|
533,875 |
|
Restructuring/Asset impairment
charges |
|
18,110 |
|
|
|
20,652 |
|
|
|
52,981 |
|
|
|
43,357 |
|
(Loss)/Gain on divestiture of
business and other assets |
|
(537 |
) |
|
|
— |
|
|
|
78,844 |
|
|
|
— |
|
Operating profit |
|
162,937 |
|
|
|
181,942 |
|
|
|
580,444 |
|
|
|
548,480 |
|
Other income, net |
|
36,943 |
|
|
|
— |
|
|
|
36,943 |
|
|
|
— |
|
Non-operating pension
costs |
|
3,424 |
|
|
|
1,249 |
|
|
|
10,424 |
|
|
|
4,251 |
|
Net interest expense |
|
29,674 |
|
|
|
25,566 |
|
|
|
94,684 |
|
|
|
67,792 |
|
Income before income
taxes |
|
166,782 |
|
|
|
155,127 |
|
|
|
512,279 |
|
|
|
476,437 |
|
Provision for income
taxes |
|
39,351 |
|
|
|
36,824 |
|
|
|
127,003 |
|
|
|
116,712 |
|
Income before equity in
earnings of affiliates |
|
127,431 |
|
|
|
118,303 |
|
|
|
385,276 |
|
|
|
359,725 |
|
Equity in earnings of
affiliates, net of tax |
|
3,627 |
|
|
|
4,199 |
|
|
|
8,795 |
|
|
|
10,151 |
|
Net income |
|
131,058 |
|
|
|
122,502 |
|
|
|
394,071 |
|
|
|
369,876 |
|
Net income attributable to
noncontrolling interests |
|
(309 |
) |
|
|
(273 |
) |
|
|
(354 |
) |
|
|
(642 |
) |
Net income attributable to
Sonoco |
$ |
130,749 |
|
|
$ |
122,229 |
|
|
$ |
393,717 |
|
|
$ |
369,234 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – diluted |
|
98,912 |
|
|
|
98,762 |
|
|
|
98,800 |
|
|
|
98,669 |
|
|
|
|
|
|
|
|
|
Diluted earnings per common
share |
$ |
1.32 |
|
|
$ |
1.24 |
|
|
$ |
3.98 |
|
|
$ |
3.74 |
|
Dividends per common
share |
$ |
0.51 |
|
|
$ |
0.49 |
|
|
$ |
1.51 |
|
|
$ |
1.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL SEGMENT INFORMATION (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
Net sales: |
|
|
|
|
|
|
|
|
Consumer Packaging |
$ |
938,407 |
|
|
$ |
1,030,549 |
|
|
$ |
2,771,290 |
|
|
$ |
2,888,630 |
|
|
Industrial Paper
Packaging |
|
580,035 |
|
|
|
661,452 |
|
|
|
1,781,033 |
|
|
|
2,087,981 |
|
|
All Other |
|
191,977 |
|
|
|
198,215 |
|
|
|
593,169 |
|
|
|
597,919 |
|
|
Net sales |
$ |
1,710,419 |
|
|
$ |
1,890,216 |
|
|
$ |
5,145,492 |
|
|
$ |
5,574,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit: |
|
|
|
|
|
|
|
|
Consumer Packaging |
$ |
112,038 |
|
|
$ |
127,859 |
|
|
$ |
299,083 |
|
|
$ |
440,889 |
|
|
Industrial Paper
Packaging |
|
75,006 |
|
|
|
81,859 |
|
|
|
256,413 |
|
|
|
248,721 |
|
|
All Other |
|
25,502 |
|
|
|
15,373 |
|
|
|
81,409 |
|
|
|
46,426 |
|
|
Corporate |
|
|
|
|
|
|
|
|
Restructuring/Asset impairment charges |
|
(18,110 |
) |
|
|
(20,652 |
) |
|
|
(52,981 |
) |
|
|
(43,357 |
) |
|
Amortization of acquisition intangibles |
|
(21,379 |
) |
|
|
(20,690 |
) |
|
|
(63,082 |
) |
|
|
(60,361 |
) |
|
Other operating income/(charges), net |
|
(10,120 |
) |
|
|
(1,807 |
) |
|
|
59,602 |
|
|
|
(83,838 |
) |
|
Operating profit |
$ |
162,937 |
|
|
$ |
181,942 |
|
|
$ |
580,444 |
|
|
$ |
548,480 |
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) |
(Dollars in thousands) |
|
|
|
Nine Months Ended |
|
October 1, 2023 |
|
October 2, 2022 |
|
|
|
|
Net income |
$ |
394,071 |
|
|
$ |
369,876 |
|
Net (gains)/losses on asset
impairments, disposition of assets and divestiture of business and
other assets |
|
(87,770 |
) |
|
|
13,679 |
|
Depreciation, depletion and
amortization |
|
249,387 |
|
|
|
231,095 |
|
Pension and postretirement
plan (contributions), net of non-cash expense |
|
2,368 |
|
|
|
(26,597 |
) |
Changes in working
capital |
|
67,335 |
|
|
|
(317,010 |
) |
Changes in tax accounts |
|
(4,902 |
) |
|
|
42,748 |
|
Other operating activity |
|
(3,612 |
) |
|
|
8,264 |
|
Net cash provided by
operating activities |
|
616,877 |
|
|
|
322,055 |
|
|
|
|
|
Purchases of property, plant
and equipment, net |
|
(182,137 |
) |
|
|
(230,732 |
) |
Proceeds from the sale of
business, net |
|
31,147 |
|
|
|
— |
|
Cost of acquisitions, net of
cash acquired |
|
(313,362 |
) |
|
|
(1,337,704 |
) |
Net debt (repayments)/
borrowings |
|
27,088 |
|
|
|
1,445,194 |
|
Cash dividends |
|
(147,477 |
) |
|
|
(139,289 |
) |
Payments for share
repurchases |
|
(10,605 |
) |
|
|
(4,056 |
) |
Other, including effects of
exchange rates on cash |
|
8,971 |
|
|
|
(29,734 |
) |
Purchase of noncontrolling
interest |
|
— |
|
|
|
(14,474 |
) |
Net increase in cash and cash
equivalents |
|
30,502 |
|
|
|
11,260 |
|
Cash and cash equivalents at
beginning of period |
|
227,438 |
|
|
|
170,978 |
|
Cash and cash equivalents at
end of period |
$ |
257,940 |
|
|
$ |
182,238 |
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(Dollars in thousands) |
|
|
October 1, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
$ |
257,940 |
|
|
$ |
227,438 |
|
|
Trade accounts receivable, net
of allowances |
|
964,054 |
|
|
|
862,712 |
|
|
Other receivables |
|
100,772 |
|
|
|
99,492 |
|
|
Inventories |
|
826,032 |
|
|
|
1,095,558 |
|
|
Prepaid expenses |
|
91,090 |
|
|
|
76,054 |
|
|
|
|
2,239,888 |
|
|
|
2,361,254 |
|
Property, plant
and equipment, net |
|
1,826,230 |
|
|
|
1,710,399 |
|
Right of use
asset-operating leases |
|
311,642 |
|
|
|
296,781 |
|
Goodwill |
|
1,762,411 |
|
|
|
1,675,311 |
|
Other intangible
assets, net |
|
873,518 |
|
|
|
741,598 |
|
Other assets |
|
256,310 |
|
|
|
267,597 |
|
|
|
$ |
7,269,999 |
|
|
$ |
7,052,940 |
|
Liabilities and Shareholders’ Equity |
|
|
|
Current
Liabilities: |
|
|
|
|
Payable to suppliers and other
payables |
$ |
1,116,485 |
|
|
$ |
1,224,556 |
|
|
Notes payable and current
portion of long-term debt |
|
42,279 |
|
|
|
502,440 |
|
|
Accrued taxes |
|
26,435 |
|
|
|
16,905 |
|
|
|
|
1,185,199 |
|
|
|
1,743,901 |
|
Long-term debt,
net of current portion |
|
3,212,454 |
|
|
|
2,719,783 |
|
Noncurrent
operating lease liabilities |
|
262,667 |
|
|
|
250,994 |
|
Pension and other
postretirement benefits |
|
131,668 |
|
|
|
120,084 |
|
Deferred income
taxes and other |
|
138,856 |
|
|
|
145,381 |
|
Total equity |
|
2,339,155 |
|
|
|
2,072,797 |
|
|
|
$ |
7,269,999 |
|
|
$ |
7,052,940 |
|
|
|
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. 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, integration, and divestiture-related costs;
- gains or losses from the divestiture of businesses and 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;
- derivative gains/losses;
- other non-operating income and losses; and
- certain 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 attributable to
noncontrolling interests; restructuring/asset impairment charges;
changes in LIFO inventory reserves; gains/losses from the
divestiture of businesses and other assets; acquisition,
integration and 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 October 1,
2023 |
Dollars in thousands,
except per share data |
Operating Profit |
|
Income Before Income Taxes |
|
Provision for Income Taxes |
|
Net Income Attributable to Sonoco |
|
Diluted EPS |
As Reported |
$ |
162,937 |
|
|
$ |
166,782 |
|
|
$ |
39,351 |
|
|
$ |
130,749 |
|
|
$ |
1.32 |
|
Acquisition, integration and divestiture-related costs |
|
12,472 |
|
|
|
12,472 |
|
|
|
1,979 |
|
|
|
10,493 |
|
|
|
0.10 |
|
Changes in LIFO inventory reserves |
|
(3,186 |
) |
|
|
(3,186 |
) |
|
|
(816 |
) |
|
|
(2,370 |
) |
|
|
(0.02 |
) |
Amortization of acquisition intangibles |
|
21,379 |
|
|
|
21,379 |
|
|
|
5,197 |
|
|
|
16,182 |
|
|
|
0.16 |
|
Restructuring/Asset impairment charges |
|
18,110 |
|
|
|
18,110 |
|
|
|
4,385 |
|
|
|
13,974 |
|
|
|
0.14 |
|
Loss on divestiture of business and other assets |
|
537 |
|
|
|
537 |
|
|
|
125 |
|
|
|
412 |
|
|
|
— |
|
Other income, net |
|
— |
|
|
|
(36,943 |
) |
|
|
(8,929 |
) |
|
|
(28,014 |
) |
|
|
(0.28 |
) |
Non-operating pension costs |
|
— |
|
|
|
3,424 |
|
|
|
852 |
|
|
|
2,572 |
|
|
|
0.03 |
|
Net gain from derivatives |
|
(3,310 |
) |
|
|
(3,310 |
) |
|
|
(830 |
) |
|
|
(2,480 |
) |
|
|
(0.03 |
) |
Other adjustments |
|
3,607 |
|
|
|
3,607 |
|
|
|
252 |
|
|
|
3,355 |
|
|
|
0.04 |
|
Total adjustments |
$ |
49,609 |
|
|
$ |
16,090 |
|
|
$ |
2,215 |
|
|
$ |
14,124 |
|
|
$ |
0.14 |
|
Adjusted |
$ |
212,546 |
|
|
$ |
182,872 |
|
|
$ |
41,566 |
|
|
$ |
144,873 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to rounding,
individual items may not sum appropriately. |
|
|
For the three-month period ended October 2,
2022 |
Dollars in thousands,
except per share data |
Operating Profit |
|
Income Before Income Taxes |
|
Provision for Income Taxes |
|
Net Income Attributable to Sonoco |
|
Diluted EPS |
As Reported |
$ |
181,942 |
|
|
$ |
155,127 |
|
|
$ |
36,824 |
|
|
$ |
122,229 |
|
|
$ |
1.24 |
|
Acquisition, integration and divestiture-related costs |
|
2,022 |
|
|
|
2,022 |
|
|
|
765 |
|
|
|
1,257 |
|
|
|
0.01 |
|
Changes in LIFO inventory reserves |
|
(302 |
) |
|
|
(302 |
) |
|
|
— |
|
|
|
(302 |
) |
|
|
— |
|
Amortization of acquisition intangibles |
|
20,690 |
|
|
|
20,690 |
|
|
|
4,938 |
|
|
|
15,752 |
|
|
|
0.16 |
|
Restructuring/Asset impairment charges |
|
20,652 |
|
|
|
20,652 |
|
|
|
4,862 |
|
|
|
15,976 |
|
|
|
0.16 |
|
Non-operating pension costs |
|
— |
|
|
|
1,249 |
|
|
|
340 |
|
|
|
909 |
|
|
|
0.01 |
|
Net loss from derivatives |
|
1,478 |
|
|
|
1,478 |
|
|
|
378 |
|
|
|
1,100 |
|
|
|
0.01 |
|
Other adjustments |
|
(1,391 |
) |
|
|
(1,391 |
) |
|
|
(2,015 |
) |
|
|
624 |
|
|
|
0.01 |
|
Total adjustments |
$ |
43,149 |
|
|
$ |
44,398 |
|
|
$ |
9,268 |
|
|
$ |
35,316 |
|
|
$ |
0.36 |
|
Adjusted |
$ |
225,091 |
|
|
$ |
199,525 |
|
|
$ |
46,092 |
|
|
$ |
157,545 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
|
|
|
For the nine-month period ended October 1,
2023 |
Dollars in thousands,
except per share data |
Operating Profit |
|
Income Before Income Taxes |
|
Provision for Income Taxes |
|
Net Income Attributable to Sonoco |
|
Diluted EPS |
As Reported |
$ |
580,444 |
|
|
$ |
512,279 |
|
|
$ |
127,003 |
|
|
$ |
393,717 |
|
|
$ |
3.98 |
|
Acquisition, integration and divestiture-related costs |
|
22,192 |
|
|
|
22,192 |
|
|
|
4,249 |
|
|
|
17,943 |
|
|
|
0.18 |
|
Changes in LIFO inventory reserves |
|
(10,186 |
) |
|
|
(10,186 |
) |
|
|
(2,564 |
) |
|
|
(7,622 |
) |
|
|
(0.08 |
) |
Amortization of acquisition intangibles |
|
63,082 |
|
|
|
63,082 |
|
|
|
15,312 |
|
|
|
47,770 |
|
|
|
0.48 |
|
Restructuring/Asset impairment charges |
|
52,981 |
|
|
|
52,981 |
|
|
|
12,344 |
|
|
|
40,658 |
|
|
|
0.41 |
|
Gain on divestiture of business and other assets |
|
(78,844 |
) |
|
|
(78,844 |
) |
|
|
(18,823 |
) |
|
|
(60,021 |
) |
|
|
(0.61 |
) |
Other income, net |
|
— |
|
|
|
(36,943 |
) |
|
|
(8,929 |
) |
|
|
(28,014 |
) |
|
|
(0.28 |
) |
Non-operating pension costs |
|
— |
|
|
|
10,424 |
|
|
|
2,589 |
|
|
|
7,835 |
|
|
|
0.08 |
|
Net gain from derivatives |
|
(1,513 |
) |
|
|
(1,513 |
) |
|
|
(381 |
) |
|
|
(1,132 |
) |
|
|
(0.01 |
) |
Other adjustments |
|
8,750 |
|
|
|
8,750 |
|
|
|
1,423 |
|
|
|
7,327 |
|
|
|
0.09 |
|
Total adjustments |
$ |
56,462 |
|
|
$ |
29,943 |
|
|
$ |
5,220 |
|
|
$ |
24,744 |
|
|
$ |
0.26 |
|
Adjusted |
$ |
636,906 |
|
|
$ |
542,222 |
|
|
$ |
132,223 |
|
|
$ |
418,461 |
|
|
$ |
4.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
|
|
For the nine-month period ended October 2,
2022 |
Dollars in thousands,
except per share data |
Operating Profit |
|
Income Before Income Taxes |
|
Provision for Income Taxes |
|
Net Income Attributable to Sonoco |
|
Diluted EPS |
As Reported |
$ |
548,480 |
|
|
$ |
476,437 |
|
|
$ |
116,712 |
|
|
$ |
369,234 |
|
|
$ |
3.74 |
|
Acquisition, integration and divestiture-related costs |
|
62,655 |
|
|
|
62,655 |
|
|
|
15,529 |
|
|
|
47,126 |
|
|
|
0.48 |
|
Changes in LIFO inventory reserves |
|
25,088 |
|
|
|
25,088 |
|
|
|
6,396 |
|
|
|
18,692 |
|
|
|
0.19 |
|
Amortization of acquisition intangibles |
|
60,361 |
|
|
|
60,361 |
|
|
|
14,666 |
|
|
|
45,695 |
|
|
|
0.46 |
|
Restructuring/Asset impairment charges |
|
43,357 |
|
|
|
43,357 |
|
|
|
7,339 |
|
|
|
36,304 |
|
|
|
0.37 |
|
Non-operating pension costs |
|
— |
|
|
|
4,251 |
|
|
|
1,184 |
|
|
|
3,067 |
|
|
|
0.03 |
|
Net gain from derivatives |
|
(2,316 |
) |
|
|
(2,316 |
) |
|
|
(578 |
) |
|
|
(1,738 |
) |
|
|
(0.02 |
) |
Other adjustments |
|
(1,589 |
) |
|
|
(1,725 |
) |
|
|
2,605 |
|
|
|
(4,330 |
) |
|
|
(0.04 |
) |
Total adjustments |
$ |
187,556 |
|
|
$ |
191,671 |
|
|
$ |
47,141 |
|
|
$ |
144,816 |
|
|
$ |
1.47 |
|
Adjusted |
$ |
736,036 |
|
|
$ |
668,108 |
|
|
$ |
163,853 |
|
|
$ |
514,050 |
|
|
$ |
5.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to rounding,
individual items may not sum appropriately. |
|
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
|
|
Three Months Ended |
Dollars in
thousands |
October 1, 2023 |
|
October 2, 2022 |
|
|
|
Net income attributable to Sonoco |
$ |
130,749 |
|
|
$ |
122,229 |
|
Adjustments: |
|
|
Interest expense |
|
32,847 |
|
|
|
26,714 |
|
Interest income |
|
(3,173 |
) |
|
|
(1,148 |
) |
Provision for income taxes |
|
39,351 |
|
|
|
36,824 |
|
Depreciation, depletion, and amortization |
|
85,570 |
|
|
|
79,151 |
|
Non-operating pension costs |
|
3,424 |
|
|
|
1,249 |
|
Net income attributable to noncontrolling interests |
|
309 |
|
|
|
273 |
|
Restructuring/Asset impairment charges |
|
18,110 |
|
|
|
20,652 |
|
Changes in LIFO inventory reserves |
|
(3,186 |
) |
|
|
(302 |
) |
Loss on divestiture of business and other assets |
|
537 |
|
|
|
— |
|
Acquisition, integration and divestiture-related costs |
|
12,472 |
|
|
|
2,022 |
|
Other income, net |
|
(36,943 |
) |
|
|
— |
|
Net (gain)/loss from derivatives |
|
(3,310 |
) |
|
|
1,478 |
|
Other non-GAAP adjustments |
|
3,607 |
|
|
|
(1,391 |
) |
Adjusted
EBITDA |
$ |
280,364 |
|
|
$ |
287,751 |
|
|
|
|
Net Sales |
$ |
1,710,419 |
|
|
$ |
1,890,216 |
|
Net Income Margin |
|
7.6 |
% |
|
|
6.5 |
% |
Adjusted EBITDA Margin |
|
16.4 |
% |
|
|
15.2 |
% |
|
|
|
|
|
|
|
|
Segment results viewed by the Company’s
management to evaluate segment performance do not include
restructuring/asset impairment charges, amortization of acquisition
intangibles, acquisition, integration, and divestiture-related
costs, changes in LIFO inventory reserves, gains/losses from the
sale of businesses and other assets, 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 |
|
|
|
|
|
For the Three Months
Ended October 1, 2023 |
|
|
|
|
|
Dollars in thousands |
Consumer Packaging segment |
|
Industrial Paper Packaging segment |
|
All Other |
|
Corporate |
|
Total |
Segment and Total Operating Profit |
$ |
112,038 |
|
|
$ |
75,006 |
|
|
$ |
25,502 |
|
|
$ |
(49,609 |
) |
|
$ |
162,937 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion and amortization1 |
|
31,401 |
|
|
|
26,558 |
|
|
|
6,232 |
|
|
|
21,379 |
|
|
|
85,570 |
|
Equity in earnings of affiliates, net of tax |
|
284 |
|
|
|
3,343 |
|
|
|
— |
|
|
|
— |
|
|
|
3,627 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,110 |
|
|
|
18,110 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,186 |
) |
|
|
(3,186 |
) |
Acquisition, integration and divestiture-related costs4 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,472 |
|
|
|
12,472 |
|
Loss from divestiture of business and other assets |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
537 |
|
|
|
537 |
|
Net gains from derivatives5 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,310 |
) |
|
|
(3,310 |
) |
Other non-GAAP adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,607 |
|
|
|
3,607 |
|
Segment Adjusted
EBITDA |
$ |
143,723 |
|
|
$ |
104,907 |
|
|
$ |
31,734 |
|
|
$ |
— |
|
|
$ |
280,364 |
|
|
|
|
|
|
|
Net Sales |
$ |
938,407 |
|
|
$ |
580,035 |
|
|
$ |
191,977 |
|
|
|
|
Segment Operating Profit
Margin |
|
11.9 |
% |
|
|
12.9 |
% |
|
|
13.3 |
% |
|
|
|
Segment Adjusted EBITDA
Margin |
|
15.3 |
% |
|
|
18.1 |
% |
|
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$14,197, the Industrial segment of $3,414, and All Other of
$3,768.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $8,288, the
Industrial segment of $6,430, and All Other of $1,766.3 Included in
Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $(3,325) and the Industrial segment of
$139.4 Included in Corporate are acquisition, integration and
divestiture-related costs associated with the Consumer segment of
$410 and the Industrial segment of $5,046.5 Included in Corporate
are net gains on derivatives associated with the Consumer segment
of $(468), the Industrial segment of $(2,178), and All Other of
$(664).
|
|
|
|
|
|
Segment Adjusted
EBITDA and All Other Adjusted EBITDA Reconciliation |
|
|
|
|
|
For the Three Months
Ended October 2, 2022 |
|
|
|
|
|
Dollars in thousands |
Consumer Packaging segment |
|
Industrial Paper Packaging segment |
|
All Other |
|
Corporate |
|
Total |
Segment and Total Operating Profit |
$ |
127,859 |
|
|
$ |
81,859 |
|
|
$ |
15,373 |
|
|
$ |
(43,149 |
) |
|
$ |
181,942 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion, and amortization1 |
|
29,102 |
|
|
|
23,164 |
|
|
|
6,195 |
|
|
|
20,690 |
|
|
|
79,151 |
|
Equity in earnings of affiliates, net of tax |
|
359 |
|
|
|
3,840 |
|
|
|
— |
|
|
|
— |
|
|
|
4,199 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,652 |
|
|
|
20,652 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(302 |
) |
|
|
(302 |
) |
Acquisition, integration and divestiture-related costs4 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,022 |
|
|
|
2,022 |
|
Net losses from derivatives5 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,478 |
|
|
|
1,478 |
|
Other non-GAAP adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,391 |
) |
|
|
(1,391 |
) |
Segment Adjusted
EBITDA |
$ |
157,320 |
|
|
$ |
108,863 |
|
|
$ |
21,568 |
|
|
$ |
— |
|
|
$ |
287,751 |
|
|
|
|
|
|
|
Net Sales |
$ |
1,030,549 |
|
|
$ |
661,452 |
|
|
$ |
198,215 |
|
|
|
|
Segment Operating Profit
Margin |
|
12.4 |
% |
|
|
12.4 |
% |
|
|
7.8 |
% |
|
|
|
Segment Adjusted EBITDA
Margin |
|
15.3 |
% |
|
|
16.5 |
% |
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is amortization of
acquisition intangibles associated with the Consumer segment of
$14,326, the Industrial segment of $1,973, and All Other of
$4,392.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $4,350, the
Industrial segment of $7,674, and All Other of $18.3 Included in
Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $(1,653) and the Industrial segment of
$1,351.4 Included in Corporate are acquisition, integration and
divestiture-related costs associated with the Consumer segment of
$855 and the Industrial segment of $800.5 Included in Corporate are
net losses on derivatives associated with the Consumer segment of
$203, the Industrial segment of $986, and All Other of $289.
|
|
|
Adjusted EBITDA and
Adjusted EBITDA Margin |
|
|
|
Nine Months Ended |
Dollars in
thousands |
October 1, 2023 |
|
October 2, 2022 |
|
|
|
Net income attributable to Sonoco |
$ |
393,717 |
|
|
$ |
369,233 |
|
Adjustments: |
|
|
Interest expense |
|
101,363 |
|
|
|
71,242 |
|
Interest income |
|
(6,679 |
) |
|
|
(3,450 |
) |
Provision for income taxes |
|
127,003 |
|
|
|
116,712 |
|
Depreciation, depletion, and amortization |
|
249,387 |
|
|
|
231,095 |
|
Non-operating pension costs |
|
10,424 |
|
|
|
4,251 |
|
Net income attributable to noncontrolling interests |
|
354 |
|
|
|
642 |
|
Restructuring/Asset impairment charges |
|
52,981 |
|
|
|
43,357 |
|
Changes in LIFO inventory reserves |
|
(10,186 |
) |
|
|
25,088 |
|
Gain from divestiture of business and other assets |
|
(78,844 |
) |
|
|
— |
|
Acquisition, integration and divestiture-related costs |
|
22,192 |
|
|
|
62,655 |
|
Other income, net |
|
(36,943 |
) |
|
|
— |
|
Net gain from derivatives |
|
(1,514 |
) |
|
|
(2,316 |
) |
Other non-GAAP adjustments |
|
8,750 |
|
|
|
(1,589 |
) |
Adjusted
EBITDA |
$ |
832,005 |
|
|
$ |
916,920 |
|
|
|
|
Net Sales |
$ |
5,145,492 |
|
|
$ |
5,574,530 |
|
Net Income Margin |
|
7.7 |
% |
|
|
6.6 |
% |
Adjusted EBITDA Margin |
|
16.2 |
% |
|
|
16.4 |
% |
|
|
|
|
|
|
|
|
The following tables reconcile Segment and Total Operating
Profit, the closest GAAP measure of profitability, to Segment
Adjusted EBITDA.
|
|
|
|
|
|
Segment Adjusted
EBITDA and All Other Adjusted EBITDA Reconciliation |
|
|
|
|
|
For the Nine Months
Ended October 1, 2023 |
|
|
|
|
|
Dollars in thousands |
Consumer Packaging segment |
|
Industrial Paper Packaging segment |
|
All Other |
|
Corporate |
|
Total |
Segment and Total Operating Profit |
$ |
299,083 |
|
|
$ |
256,413 |
|
|
$ |
81,409 |
|
|
$ |
(56,461 |
) |
|
$ |
580,444 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion and amortization1 |
|
91,395 |
|
|
|
76,444 |
|
|
|
18,466 |
|
|
|
63,082 |
|
|
|
249,387 |
|
Equity in earnings of affiliates, net of tax |
|
493 |
|
|
|
8,302 |
|
|
|
— |
|
|
|
— |
|
|
|
8,795 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
52,981 |
|
|
|
52,981 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,186 |
) |
|
|
(10,186 |
) |
Acquisition, integration and divestiture-related costs4 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22,192 |
|
|
|
22,192 |
|
Gains from divestiture of business and other assets5 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78,844 |
) |
|
|
(78,844 |
) |
Net gains from derivatives6 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,514 |
) |
|
|
(1,514 |
) |
Other non-GAAP adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,750 |
|
|
|
8,750 |
|
Segment Adjusted
EBITDA |
$ |
390,971 |
|
|
$ |
341,159 |
|
|
$ |
99,875 |
|
|
$ |
— |
|
|
$ |
832,005 |
|
|
|
|
|
|
|
Net Sales |
$ |
2,771,290 |
|
|
$ |
1,781,033 |
|
|
$ |
593,169 |
|
|
|
|
Segment Operating Profit
Margin |
|
10.8 |
% |
|
|
14.4 |
% |
|
|
13.7 |
% |
|
|
|
Segment Adjusted EBITDA
Margin |
|
14.1 |
% |
|
|
19.2 |
% |
|
|
16.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$42,829, the Industrial segment of $8,913, and All Other of
$11,340.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $11,792, the
Industrial segment of $32,961, and All Other of $5,875.3 Included
in Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $(9,428) and the Industrial segment of
$(758).4 Included in Corporate are acquisition, integration and
divestiture-related costs associated with the Consumer segment of
$1,302 and the Industrial segment of $5,394.5 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
$(6,834).6 Included in Corporate are gains on derivatives
associated with the Consumer segment of $(194), the Industrial
segment of $(1,045), and All Other of $(275).
|
|
|
|
|
|
Segment Adjusted
EBITDA and All Other Adjusted EBITDA Reconciliation |
|
|
|
|
|
For the Nine Months
Ended October 2, 2022 |
|
|
|
|
|
Dollars in thousands |
Consumer Packaging segment |
|
Industrial Paper Packaging segment |
|
All Other |
|
Corporate |
|
Total |
Segment and Total Operating Profit |
$ |
440,889 |
|
|
$ |
248,721 |
|
|
$ |
46,426 |
|
|
$ |
(187,556 |
) |
|
$ |
548,480 |
|
Adjustments: |
|
|
|
|
|
Depreciation, depletion, and amortization1 |
|
83,161 |
|
|
|
68,941 |
|
|
|
18,631 |
|
|
|
60,361 |
|
|
|
231,094 |
|
Equity in earnings of affiliates, net of tax |
|
368 |
|
|
|
9,783 |
|
|
|
— |
|
|
|
— |
|
|
|
10,151 |
|
Restructuring/Asset impairment charges2 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
43,357 |
|
|
|
43,357 |
|
Changes in LIFO inventory reserves3 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25,088 |
|
|
|
25,088 |
|
Acquisition, integration and divestiture-related costs4 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
62,655 |
|
|
|
62,655 |
|
Net gains from derivatives5 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,316 |
) |
|
|
(2,316 |
) |
Other non-GAAP adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,589 |
) |
|
|
(1,589 |
) |
Segment Adjusted
EBITDA |
$ |
524,418 |
|
|
$ |
327,445 |
|
|
$ |
65,057 |
|
|
$ |
— |
|
|
$ |
916,920 |
|
|
|
|
|
|
|
Net Sales |
$ |
2,888,630 |
|
|
$ |
2,087,981 |
|
|
$ |
597,919 |
|
|
|
|
Segment Operating Profit
Margin |
|
15.3 |
% |
|
|
11.9 |
% |
|
|
7.8 |
% |
|
|
|
Segment Adjusted EBITDA
Margin |
|
18.2 |
% |
|
|
15.7 |
% |
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Included in Corporate is the amortization of
acquisition intangibles associated with the Consumer segment of
$40,938, the Industrial segment of $6,098, and All Other of
$13,325.2 Included in Corporate are restructuring/asset impairment
charges associated with the Consumer segment of $9,459, the
Industrial segment of $19,194, and All Other of $(399).3 Included
in Corporate are changes in LIFO inventory reserves associated with
the Consumer segment of $22,589 and the Industrial segment of
$2,499.4 Included in Corporate are acquisition, integration and
divestiture-related costs associated with the Consumer segment of
$38,039 and the Industrial segment of $1,866.5 Included in
Corporate are net gains on derivatives associated with the Consumer
segment of $(347), the Industrial segment of $(1,477), and All
Other of $(492).
Free Cash Flow
The 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.
|
|
|
Nine Months Ended |
FREE CASH
FLOW |
October 1, 2023 |
|
October 2, 2022 |
|
|
|
|
Net cash provided by operating activities |
$ |
616,877 |
|
|
$ |
322,055 |
|
Purchase of property, plant
and equipment, net |
|
(182,137 |
) |
|
|
(230,732 |
) |
Free Cash Flow |
$ |
434,740 |
|
|
$ |
91,323 |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
Estimated Low End |
|
Estimated High End |
FREE CASH
FLOW |
December 31, 2023 |
|
December 31, 2023 |
Net cash provided by operating
activities |
$ |
850,000 |
|
|
$ |
900,000 |
|
Purchase of property, plant
and equipment, net |
|
(250,000 |
) |
|
|
(210,000 |
) |
Free Cash Flow |
$ |
600,000 |
|
|
$ |
690,000 |
|
|
|
|
|
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