Sonoco Products Co (SON) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...

GuruFocus Research

2 May 2024 at 3:09 am·3-min read

Sales: $1.6 billion
Adjusted EBITDA: $245 million
EBITDA Margin: 15%
Adjusted Earnings Per Share: $1.12
Operating Cash Flow: $166 million
Productivity: $51 million

Release Date: May 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sonoco Products Co (NYSE:SON) reported strong first quarter 2024 financial results with sales of $1.6 billion and adjusted EBITDA of $245 million.
Adjusted earnings per share were $1.12, exceeding the midpoint of the guidance range.
Productivity gains were significant, amounting to $51 million due to focused execution and operating discipline.
The company successfully completed the divestiture of the Protective Solutions business, aligning with its strategy of portfolio simplification.
Sonoco Products Co (NYSE:SON) has entered into a 15-year virtual power purchase agreement, supporting its sustainability goals and reducing emissions.

Negative Points

Net sales decreased by 5% to $1.64 billion due to index-based price pressures.
Negative price cost of $0.51 per share and negative volume mix of $0.12 per share impacted earnings.
Consumer segment faced challenges with volume mix declining due to inflationary pricing at retail.
Industrial segment also experienced a decrease in sales by 4%, with price cost negatively impacting EBITDA by $67 million.
The 'All Other' business segment saw a 14% decrease in sales, reflecting ongoing challenges in non-core areas.

Q & A Highlights

Warning! GuruFocus has detected 6 Warning Signs with SON.

Q: Is the destocking phase over for Sonoco's Consumer segment, and are current market conditions the main factor affecting performance? A: (Robert Howard Coker - President, CEO & Director) Yes, the destocking phase is largely complete, and current market conditions are now the primary factor.

Q: What is contributing to Sonoco's better-than-market performance in the Aerosol segment? A: (Robert Howard Coker - President, CEO & Director) The mix of customers in our portfolio, who are performing better than last year, is the main contributor.

Q: Can you provide more details on the decline in the RPC component of the Consumer segment and expectations moving forward? A: (Robert Howard Coker - President, CEO & Director) The decline was mainly in North America due to a few specific customers. Increased promotional activities are expected to improve performance going forward.

Q: How sustainable is Sonoco's productivity in the context of current volume levels? A: (Rodger D. Fuller - COO) The company expects to surpass last year's productivity levels, which were over $100 million, even if volumes remain low, thanks to ongoing capital investments and operational efficiencies.

Q: What is the impact of index-based pricing on Sonoco's ability to achieve price increases in the Industrial segment? A: (Robert Howard Coker - President, CEO & Director) Contractual obligations tied to indices must be honored, but the company has contingency plans to address shortfalls. The strong market demand and backlog should ideally be reflected in index adjustments.

Q: What are the expectations for the upcoming pack season in the food can business, considering the impact of imported canned goods? A: (Robert Howard Coker - President, CEO & Director) There is no significant direct impact from imports on our customers currently, and a slight improvement is expected in Q2 based on customer feedback.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Yahoo Finance AU
ATO ramps up data checks to ‘protect honest people and businesses’
The ATO has expanded its data-matching programs and can use it to pick up people doing the wrong thing.
Yahoo Finance AU
Commonwealth Bank's huge $10k move to help Aussies crack the property market
You won't have to spend years saving tens of thousands to get a foot on the ladder.
Yahoo Finance AU
David Koch's 'sad, bad and gloomy' money survival guide
Australia's economic outlook isn't as hellish as you might think, but it's not heavenly either.
Yahoo Finance
'Demand is just so strong': Nvidia CEO Jensen Huang tells Yahoo Finance supply can't keep up
Nvidia's quarterly results blew away estimates again on Wednesday, and as the company moves to its next-generation chips its CEO sees supply, not demand, serving as its biggest challenge.
BBC
Inflation rate falls to lowest in almost three years
Prices rose at 2.3% in the year to April, down from 3.2% the month before, official figures said.
Yahoo Finance Video
S&P 500, Nasdaq open higher on Nvidia Q1 earnings bump
The S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) are grooving to the tune of Nvidia's (NVDA) fiscal first-quarter earnings beat reported after the market close on Wednesday. The Nasdaq is in the green, seeing gains as high as 190 points at Thursday's market open. The Dow Jones Industrial Average (^DJI) is the standalone index laggard this morning. Morning Brief Anchors Seana Smith and Brad Smith examine the bump that the broader market is getting from the chip giant's overwhelmingly positive earnings print. Catch Yahoo Finance's interview with Nvidia CEO Jensen Huang here. For more expert insight and the latest market action, click here to watch this full episode of Morning Brief. This post was written by Luke Carberry Mogan.
Yahoo Finance AU
Powerball $150m draw: Financial advisor's hit list of things you could do with the winnings
James Wrigley said one section in particular will ensure the money will last for 'generations'.
Reuters
Snowflake expects strong Q2 as AI push boosts demand for cloud services
Shares rose 4% after the bell as the data cloud analytics company also said it plans to acquire technology assets and hire 35 employees from TruEra, an AI observability platform. The company had in April launched Snowflake Arctic, a large language model that draws from massive amounts of text to generate responses to queries and is optimized for complex enterprise workloads. The company forecast product revenue in the range of $805 million to $810 million for the second quarter, above analysts' average estimate of $785 million, according to LSEG data.
Bloomberg
DuPont Plans Three-Way Split in Return to CEO’s Playbook
(Bloomberg) -- DuPont de Nemours Inc. plans to break up — again.Most Read from BloombergNvidia Stock Surges as Sales Forecast Delivers on AI HopesHarvard Students Walk Out of Commencement Protesting SuspensionsIsrael to Restart Gaza Talks After Hostage Video Sparks OutrageCiti Trader Got 711 Warning Messages Before Sparking Flash CrashStocks Join Bonds in Falling as Fed-Cut Bets Wane: Markets WrapThe company will separate its electronics and water units through tax-free transactions, forming a t
Bloomberg
Foreigners Are Flocking into Turkish Lira Bonds at Record Pace
(Bloomberg) -- Foreign investors expanded their purchases of lira-denominated Turkish government bonds last week, notching the biggest monthly inflow into the country’s domestic debt on record. Most Read from BloombergNvidia Stock Surges as Sales Forecast Delivers on AI HopesHarvard Students Walk Out of Commencement Protesting SuspensionsCiti Trader Got 711 Warning Messages Before Sparking Flash CrashThese Flight Routes Suffer the World’s Worst TurbulenceIsrael to Restart Gaza Talks After Hostag
Insider Monkey
Is QUALCOMM Incorporated (NASDAQ:QCOM) The Best Mega Cap Dividend Stock of 2024?
We recently analyzed the best dividend stocks of 2024. Though QUALCOMM Incorporated (NASDAQ:QCOM) ranks sixth on our list of the 10 Best Dividend Stocks of 2024, We are nearly halfway through the year, and the stock market is showing consistent signs of improvement. The S&P 500 has surged by 12.2% this year so far, with […]
StockStory
Snowflake (NYSE:SNOW) Beats Q1 Sales Targets, Stock Soars
Data warehouse-as-a-service Snowflake (NYSE:SNOW) announced better-than-expected results in Q1 CY2024, with revenue up 32.9% year on year to $828.7 million. It made a non-GAAP profit of $0.14 per share, down from its profit of $0.15 per share in the same quarter last year.
Bloomberg
Nvidia Stock Surges as Sales Forecast Delivers on AI Hopes
(Bloomberg) -- Shares of Nvidia Corp., the chipmaker at the center of an artificial intelligence boom, surged on Thursday after a bullish sales forecast showed that AI computing spending remains strong.Most Read from BloombergNvidia Stock Surges as Sales Forecast Delivers on AI HopesHarvard Students Walk Out of Commencement Protesting SuspensionsStocks Join Bonds in Falling as Fed-Cut Bets Wane: Markets WrapIsrael to Restart Gaza Talks After Hostage Video Sparks OutrageCiti Trader Got 711 Warnin
Yahoo Finance Video
The best software AI plays: Analyst
RBC Capital Markets Software Equity Analyst Rishi Jaluria and Macquarie Head of US AI and Software Research Frederick Havemeyer join Market Domination to discuss the best AI plays outside major tech companies and chipmakers. Havemeyer says that cybersecurity companies will benefit from the AI race and points particularly to CrowdStrike (CRWD). "While they're not selling generative AI themselves, we think that the advent of generative AI is making it much easier for attackers to exploit a lot of things," he explains. He says that CrowdStrike is well positioned to defend against those attacks.  Jaluria points to Zoom (ZM) as an "underappreciated AI play," as it uses the technology as a tool to aid salespeople or HR representatives in analyzing behaviors. "I think about those use cases, maybe even verticalizing them for the Contact Center, where Contact Center Zoom has been getting a great amount of success," he explains. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl
Bloomberg
Wall Street Targets Bad Governance in Sri Lanka With Bond Deal
(Bloomberg) -- Nishan de Mel is a bit obsessed with debt crises. Primarily because de Mel, an Oxford-trained economist, has long suspected that the underlying cause is often bad governance. So when his native Sri Lanka fell into an economic disaster of its own a couple years ago, he decided to pore through decades of data to put his theory to the test.Most Read from BloombergThese Flight Routes Suffer the World’s Worst TurbulenceCiti Trader Got 711 Warning Messages Before Sparking Flash CrashOne
CNN Business
Dow falls more than 600 points, notching worst day of the year
The Dow tumbled by more than 600 points Thursday, notching its worst day of 2024, as all three major indexes closed lower. The drop came even after AI-darling Nvidia delivered stellar quarterly earnings and announced a 10-for-1 stock split.
Simply Wall St.
Top Japanese Growth Companies With High Insider Ownership In May 2024
Despite some economic challenges, Japanese equities have shown resilience, with the Nikkei 225 Index gaining 1.5% recently. This backdrop provides a compelling context to explore growth companies in Japan, particularly those with high insider ownership which can indicate confidence from those closest to the company's operations and potential.
Bloomberg
Snowflake Projects Strong Growth With Focus on AI Products
(Bloomberg) -- Snowflake Inc. gave a sales outlook for the current quarter that beat estimates, suggesting that new artificial intelligence-oriented products can help accelerate growth. Most Read from BloombergNvidia Stock Surges as Sales Forecast Delivers on AI HopesHarvard Students Walk Out of Commencement Protesting SuspensionsStocks Join Bonds in Falling as Fed-Cut Bets Wane: Markets WrapIsrael to Restart Gaza Talks After Hostage Video Sparks OutrageCiti Trader Got 711 Warning Messages Befor
Associated Press Finance
Abrupt shutdown of financial middleman Synapse has frozen thousands of Americans' deposits
The bank accounts of tens of thousands of U.S. businesses and consumers have been frozen in the aftermath of the abrupt shutdown and bankruptcy of financial technology company Synapse, which acts as a middleman between financial technology companies and banks. Synapse filed for Chapter 11 bankruptcy protection in April and has shut down its services to some of its fintech or bank partners, including Evolve Bank & Trust. Because Evolve is a bank and is required to comply with banking laws, it has to make sure all customer deposits are accounted for to the penny, which may take time.
Simply Wall St.
Unveiling US Growth Companies With High Insider Ownership In May 2024
As of May 2024, the U.S. market is experiencing a notable uplift, buoyed by strong earnings from tech giants like Nvidia, which has sparked optimism and driven gains across various sectors. This positive momentum underscores the importance of robust corporate governance and strategic insider investments, particularly in growth-oriented companies with high insider ownership. In the current climate where technological advancements and economic policies play pivotal roles in shaping market...

ALL ORDS

ASX 200

AUD/USD

OIL

GOLD

Bitcoin AUD

CMC Crypto 200

AUD/EUR

AUD/NZD

NZX 50

NASDAQ

FTSE

Dow Jones

DAX

Hang Seng

NIKKEI 225

Positive Points

Negative Points

Q & A Highlights

Latest stories