HARTSVILLE, S.C. -- Sonoco, one of the largest diversified global packaging companies, today reported financial results for its fourth quarter and full-year 2016.
Fourth Quarter Highlights
Fourth quarter 2016 GAAP earnings per diluted share were $1.04, compared with $0.55 in 2015. As a result of the Company's accounting calendar, the fourth quarter contained five fewer calendar days and four fewer business days than in 2015.
Fourth quarter 2016 GAAP results include a net gain of $0.42 per diluted share, after tax, consisting of a gain from the sale of the Company's rigid plastics blowmolding operations in November 2016, partially offset by restructuring charges and acquisition expenses. In the fourth quarter of 2015, GAAP results included a net charge of $0.09 per diluted share, after tax, in asset impairment and restructuring expenses and other non-base charges, including the negative effect of a statutory tax rate change on deferred taxes.
Base net income attributable to Sonoco (base earnings) for fourth quarter 2016 was $0.62 per diluted share, compared with $0.64 in 2015. (See base earnings definition, explanation and reconciliation to GAAP earnings later in this release.) Sonoco previously provided fourth quarter base earnings guidance of $.60 to $.65 per diluted share.
Fourth quarter 2016 net sales were $1.14 billion, down from $1.27 billion in 2015.
Cash flow from operations was $50.0 million, and reflects payments of $64.4 million in taxes and fees from the sale of blowmolding operations, compared with $145.5 million in the previous year's fourth quarter. Reflecting this decline in operating cash flow, free cash flow for the fourth quarter was a negative $29.2 million, compared with $49.3 million in 2015. (See free cash flow definition and reconciliation to cash flow from operations later in this release.)
During the fourth quarter, Sonoco completed the sale of its rigid plastics blowmolding operations for approximately $280 million, excluding fees and taxes. In addition, the Company completed the acquisition of Plastic Packaging, Inc., a Hickory, N.C. based flexible packaging company.
2016 Full-Year Highlights
Full-year 2016 GAAP earnings per diluted share were $2.81, compared with $2.44 in 2015.
Full-year 2016 GAAP results included a net gain of $0.09 per diluted share, after tax, from the sale of the Company's blowmolding operations, net of after-tax asset impairment and restructuring charges related to the sale of the Company's paper mill in France and the sale of a retail packaging business in Puerto Rico, a goodwill impairment charge for the Company's industrial converted products business in Brazil, and other restructuring charges related to previously announced plant closures.
Full-year 2015 GAAP results were negatively impacted by $0.06 per diluted share, after-tax, from a combination of the following: a favorable disposition of Fox River-related claims/litigation; gain on the sale of two metal end plants and favorable tax reserve adjustments; foreign exchange driven asset impairments in Venezuela; restructuring costs, asset impairment charges, and acquisition-related and environmental remediation expenses; and professional fees to investigate and correct the financial misstatements of an Irapuato, Mexico, packaging center.
Full-year 2016 base earnings were $2.72 per diluted share, up 8.7 percent from $2.51 per diluted share in 2015. Sonoco previously provided guidance for full-year base earnings in the range of $2.70 to $2.75 per diluted share.
Net sales for 2016 were $4.78 billion, down 3.7 percent from $4.96 billion in 2015.
Cash flow from operations for 2016 was $398.7 million, and was reduced by $64.4 million in taxes and fees for the sale of the blowmolding operations, compared with $452.9 million in 2015. Free cash flow was $65.7 million, which was reduced by $64.4 million in cash taxes and fees associated with the sale of blowmolding, compared with $155.1 million in 2015.
Full-year 2017 base earnings has been revised to $2.66 to $2.76 per diluted share, down $.02 from previous guidance issued in early December, due to an updated estimate of pension expense. This guidance does not include possible acquisitions and/or share repurchases from which the Company is targeting to deliver approximately $.06 to $.08 in additional earnings per share.
Base earnings for the first quarter of 2017 are projected to be in a range of $.55 to $.63 per diluted share, which anticipates: price/cost headwinds from rising raw material costs; the sale of the blowmolding operations; and it takes into consideration that the Company's accounting calendar has two fewer days than in the prior year. Base earnings in the first quarter of 2016 were $.65 per diluted share.
As previously guided, operating cash flow in 2017 is targeted to be approximately $470 million and free cash flow approximately $125 million.