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Sonoco, a large global packaging company, reported financial results for its first quarter, ending April 2, 2017.

GAAP net income attributable to Sonoco in the first quarter was $53.7 million, or $0.53 per diluted share, compared with $59.9 million, or $0.59 per diluted share, in 2016. Base earnings in the first quarter were $59.9 million, or $0.59 per diluted share, compared with $66.5 million, or $0.65 per diluted share, in 2016. Base earnings and base earnings per diluted share are non-GAAP financial measures adjusted to remove restructuring-related items, asset impairment charges, acquisition expenses and other items, if any, the exclusion of which the company believes improves comparability and analysis of the ongoing operating performance of the business.

First quarter GAAP earnings include after-tax restructuring costs and acquisition-related expenses of $6.1 million, or $0.06 per diluted share. In the first quarter of 2016, GAAP results included $0.06 per diluted share, after tax, in restructuring related charges.

Net sales for the first quarter were $1.17 billion, down $54.0 million, or 4.4 percent, from last year’s quarter. The decline in sales was a result of the previously mentioned divested businesses, net of acquisitions; the discontinuation of the company’s contract packaging business in Mexico; and the negative impact of foreign exchange, partially offset by higher selling prices, primarily attributed to rising recovered paper costs.

Gross profits were $220.2 million in the first quarter, down $25.1 million, compared with $245.3 million in the same period in 2016. Gross profit as a percent of sales declined to 18.8 percent, compared with 20.0 percent in the same period in 2016. The gross profit percentage reduction in the quarter was due primarily to an unfavorable price/cost relationship, most notably in our Industrial Segment. First quarter selling, general and administrative expenses were down $8.1 million from the prior year at $126.1 million, driven by the previously mentioned divested businesses, net of acquisitions, lower management incentives and fewer fiscal days, partially offset by wage and other inflation.

Cash generated from operations in the first quarter was $67.4 million, compared with $66.4 million in the same period in 2016. This $1.0 million improvement was a combination of several mostly offsetting factors. Net working capital provided $65.0 million more year over year, driven by enhanced collections of items outstanding at the end of 2016 and timing of payments to suppliers. This year-over-year improvement was offset by increases in cash paid for income taxes, higher cash contributions to the Company’s pension plan and payments of miscellaneous receivables and liabilities, as well as lower net income.

During the quarter, net capital expenditures were $49.0 million, compared to $53.1 million in the prior year quarter; and cash dividends paid were $36.8 million, compared to $35.4 million in the prior year.

The board of directors of Sonoco declared a $.39 per share quarterly common stock dividend a 5.4 percent increase from the previous quarterly dividend of $.37 per share. The dividend will be paid on June 9, 2017.

Published in the June 2017 Edition of American Recycler News