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Sonoco (SON) Completes RTS Packaging Acquisition From WestRock
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Sonoco Products Company (SON - Free Report) announced that it completed the previously announced acquisition of the remaining equity interest in RTS Packaging, LLC from joint venture partner WestRock Company , and one WestRock paper mill in Tennessee. Sonoco was a 35% owner in the joint venture with WRK prior to the sale.
The acquisition, originally announced on Nov 9, 2022, is well-aligned with Sonoco’s long-term strategy to focus on its core integrated businesses and expand its sustainable consumer packaging portfolio. The deal will further boost and expand Sonoco’s 100% recycled fiber-based packaging solutions to support the growing consumer wine, spirits, food, beauty and healthcare markets.
The purchase price for the sale was $330 million, which Sonoco funded with borrowings under its existing credit facilities and cash on hand. Post closing, the company had a net debt to adjusted EBITDA ratio of less than 2.9X.
As part of the deal, Sonoco gained a network of 15 operations and 1,100 employees in the United States, Mexico and South America. The acquisition is projected to have immediate positive impacts on earnings per share, excluding the effects of purchase accounting adjustments.
Sonoco has been active on the acquisition front recently. On Jan 22, 2022, the company completed the acquisition of Ball Metalpack for a cash payment of $1.35 billion. The deal supported Sonoco’s focus on investing in the core business that strengthens its global Paper Cans and Closures business, while bolstering its sustainable packaging portfolio with metal packaging.
In fourth-quarter 2022, Sonoco acquired Denmark-based Skjern, a privately owned manufacturer of paper, for $88 million in cash. The acquisition expanded SON’s production capacity. It will help Sonoco capitalize on the growing market for sustainable paper and packaging products in Europe.
In second-quarter 2023, the company reported adjusted earnings per share of $1.38, missing the Zacks Consensus Estimate of $1.50. The figure came below the company’s guidance of $1.45-$1.55. The bottom line fell 22% from the prior-year quarter, driven by lower volumes.
Sonoco’s net sales were $1,705 million, which missed the Zacks Consensus Estimate of $1,833 million. The top line fell 11% year over year, hurt by lower volumes.
Price Performance
Sonoco’s shares have lost 16.1% in the past year compared with the industry’s fall of 9.1%.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.81 per share. The consensus estimate for 2023 earnings has moved north by 11.4% in the past 60 days. Its shares gained 51.6% in the last year.
The Zacks Consensus Estimate for Eaton’s 2023 earnings per share is pegged at $8.80. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 3%. ETN gained 68.8% in the last year.
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Sonoco (SON) Completes RTS Packaging Acquisition From WestRock
Sonoco Products Company (SON - Free Report) announced that it completed the previously announced acquisition of the remaining equity interest in RTS Packaging, LLC from joint venture partner WestRock Company , and one WestRock paper mill in Tennessee. Sonoco was a 35% owner in the joint venture with WRK prior to the sale.
The acquisition, originally announced on Nov 9, 2022, is well-aligned with Sonoco’s long-term strategy to focus on its core integrated businesses and expand its sustainable consumer packaging portfolio. The deal will further boost and expand Sonoco’s 100% recycled fiber-based packaging solutions to support the growing consumer wine, spirits, food, beauty and healthcare markets.
The purchase price for the sale was $330 million, which Sonoco funded with borrowings under its existing credit facilities and cash on hand. Post closing, the company had a net debt to adjusted EBITDA ratio of less than 2.9X.
As part of the deal, Sonoco gained a network of 15 operations and 1,100 employees in the United States, Mexico and South America. The acquisition is projected to have immediate positive impacts on earnings per share, excluding the effects of purchase accounting adjustments.
Sonoco has been active on the acquisition front recently. On Jan 22, 2022, the company completed the acquisition of Ball Metalpack for a cash payment of $1.35 billion. The deal supported Sonoco’s focus on investing in the core business that strengthens its global Paper Cans and Closures business, while bolstering its sustainable packaging portfolio with metal packaging.
In fourth-quarter 2022, Sonoco acquired Denmark-based Skjern, a privately owned manufacturer of paper, for $88 million in cash. The acquisition expanded SON’s production capacity. It will help Sonoco capitalize on the growing market for sustainable paper and packaging products in Europe.
In second-quarter 2023, the company reported adjusted earnings per share of $1.38, missing the Zacks Consensus Estimate of $1.50. The figure came below the company’s guidance of $1.45-$1.55. The bottom line fell 22% from the prior-year quarter, driven by lower volumes.
Sonoco’s net sales were $1,705 million, which missed the Zacks Consensus Estimate of $1,833 million. The top line fell 11% year over year, hurt by lower volumes.
Price Performance
Sonoco’s shares have lost 16.1% in the past year compared with the industry’s fall of 9.1%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Sonoco currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Caterpillar Inc. (CAT - Free Report) and Eaton Corporation plc. (ETN - Free Report) . CAT sports a Zacks Rank #1 (Strong Buy) at present and ETN has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.81 per share. The consensus estimate for 2023 earnings has moved north by 11.4% in the past 60 days. Its shares gained 51.6% in the last year.
The Zacks Consensus Estimate for Eaton’s 2023 earnings per share is pegged at $8.80. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 3%. ETN gained 68.8% in the last year.