Sonoco Products Company (SON - Free Report) reported first-quarter 2017 adjusted earnings of 59 cents per share, down 9% year over year. Earnings beat the Zacks Consensus Estimate of 57 cents and came within management’s guidance range of 55–63 cents. Earnings were negatively impacted by lower volume/mix, divestitures, net of acquisitions, a negative price/cost relationship, and higher labor, maintenance, pension and other operating expenses. Procurement savings, fixed-cost productivity, lower management incentive expense, and a lower effective tax rate were minor headwinds.
On a reported basis, including one-time items, earnings per share was at 53 cents compared with 59 cents in the prior-year quarter.
Operational Update
Net sales of $1.17 billion were down 4.4% year on year, but came in line with the Zacks Consensus Estimate of $1.17 billion. The decline in sales can be attributed to the impact of previous divestitures, net of acquisitions, the discontinuation of the company's contract packaging business in Mexico and the negative impact of foreign exchange. These were partially offset by higher selling prices, primarily owing to rising recovered paper costs.
Cost of sales was $952 million, down 2.9% year on year. Gross profit during the quarter totaled $220 million, down 10% due to unfavorable price/cost relationship, particularly in the Industrial Segment. Gross margin contracted 120 basis points (bps) year over year to 18.8%.
Selling, general and administrative expenses were $126 million, down 6% year over year, chiefly due to divestitures, net of acquisitions, lower management incentives and fewer fiscal days, partially offset by wage and other inflation. Sonoco’s adjusted operating income was $94 million in the quarter, down 15% from $111 million in the prior-year quarter. Operating margin contracted 110 bps year over year to 8% in the quarter.
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Sonoco Products Company (SON - Free Report) reported first-quarter 2017 adjusted earnings of 59 cents per share, down 9% year over year. Earnings beat the Zacks Consensus Estimate of 57 cents and came within management’s guidance range of 55–63 cents. Earnings were negatively impacted by lower volume/mix, divestitures, net of acquisitions, a negative price/cost relationship, and higher labor, maintenance, pension and other operating expenses. Procurement savings, fixed-cost productivity, lower management incentive expense, and a lower effective tax rate were minor headwinds.
On a reported basis, including one-time items, earnings per share was at 53 cents compared with 59 cents in the prior-year quarter.
Operational Update
Net sales of $1.17 billion were down 4.4% year on year, but came in line with the Zacks Consensus Estimate of $1.17 billion. The decline in sales can be attributed to the impact of previous divestitures, net of acquisitions, the discontinuation of the company's contract packaging business in Mexico and the negative impact of foreign exchange. These were partially offset by higher selling prices, primarily owing to rising recovered paper costs.
Cost of sales was $952 million, down 2.9% year on year. Gross profit during the quarter totaled $220 million, down 10% due to unfavorable price/cost relationship, particularly in the Industrial Segment. Gross margin contracted 120 basis points (bps) year over year to 18.8%.
Selling, general and administrative expenses were $126 million, down 6% year over year, chiefly due to divestitures, net of acquisitions, lower management incentives and fewer fiscal days, partially offset by wage and other inflation. Sonoco’s adjusted operating income was $94 million in the quarter, down 15% from $111 million in the prior-year quarter. Operating margin contracted 110 bps year over year to 8% in the quarter.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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