Sonoco Reports 4Q, Full-Year 2021 Results

Sonoco reported financial results for its fourth quarter and full year, both ending Dec. 31, 2021.

Fourth-quarter 2021 net sales were $1.44 billion, up from $1.38 billion in 2020. Gross profits were $263.6 million in the fourth quarter, a decrease of $11.1 million or 4.1%, compared with $274.8 million in the same period in 2020. Full-year 2021 net sales were $5.59 billion, compared to $5.24 billion in 2020.

Full-year cash flow from operations was $298.7 million in 2021, compared with $705.6 million in 2020. Free cash flow in 2021 was $55.8 million, compared with $524.5 million in 2020.

2021 net sales were $5.59 billion, an increase of $353.0 million compared with $5.24 billion in 2020. Sales grew 6.7% for the year as higher selling prices, mostly implemented to offset inflation, and volume/mix improvement more than offset the negative impact from divestitures, net of acquisitions.

The GAAP net loss attributable to Sonoco for 2021 was $(85.5) million or $(0.86) per diluted share, compared with GAAP net income of $207.5 million or $2.05 per diluted share in 2020. The GAAP net loss in 2021 included after-tax charges totaling $441.2 million, or $4.41 per diluted share, mostly driven by $423.5 million, or $4.23 per diluted share, in after-tax non-operating pension costs largely attributable to pension settlement charges and by a $15 million after-tax loss related to the early extinguishment of debt.

On Jan. 26, 2022, Sonoco completed the acquisition of Ball Metalpack, a leading manufacturer of sustainable steel tinplate packaging for food and household products and the largest aerosol can producer in North America, for $1.35 billion in cash subject to customary adjustments, including for working capital, cash, and indebtedness.

Full-year 2022 base earnings are expected to be in the range of $4.60 to $4.80 per diluted share, including the projected earnings benefit from the addition of Ball Metalpack. GAAP net income attributable to Sonoco in the fourth quarter was $65.2 million, or $0.66 per diluted share, an increase of $76.8 million, compared with the GAAP net loss of $(11.6) million, or $(0.12) per diluted share, in 2020.

Full-year 2022 cash flow from operations and free cash flow are expected to be between $690 million to $740 million and $365 million to $415 million, respectively. This updated guidance reflects the expected benefit from the Ball Metalpack acquisition.

“As I look back at all we accomplished in 2021, I couldn’t be more proud of how our Sonoco team worked together to produce solid results despite unprecedented headwinds from storms, supply chain disruptions, inflation and the continuing effects of COVID-19,” said Howard Coker, Sonoco president and CEO.

“We aggressively drove price increases across all our businesses to counter higher raw material and non-material inflation,” Coker noted. “We increased capital spending to fund more high-return projects, including Project Horizon which is modernizing our Hartsville uncoated recycled paperboard complex. We better focused our sustainability efforts, including setting aggressive science-based targets to meaningfully reduce greenhouse gas emissions over the next decade. We simplified our portfolio by exiting the display and packaging business and recently added Ball Metalpack, which further expands our sustainable consumer packaging offering while being immediately accretive to base earnings and cash flow. Finally, we returned a record $397 million in cash to shareholders through dividends and share repurchases.”

As of Dec. 31, 2021, total debt was $1.61 billion, compared with $1.7 billion as of Dec. 31, 2020. At the end of 2021, the company had a total-debt-to-total-capital ratio of 46.5%, compared with 47.1% at Dec. 31, 2020.

Sonoco expects full-year 2022 operating cash flow and free cash flow to be in a range of $690 million to $740 million and $365 million and $415 million, respectively, including the positive impact of the acquisition of Ball Metalpack.

“We are extremely excited entering 2022 that our core Consumer and Industrial businesses are well positioned to achieve stronger performance coming out of the pandemic,” Coker said. “Our efforts to recover higher costs continue to gain traction and we will remain diligent to stay ahead of the price/cost curve. We expect our ‘invest in ourselves’ strategy to continue delivering enhanced growth and improved productivity.”