Sonoco Products Co. (NYSE:SON) Q3 2019 Earnings Conference Call Transcript
Oct 17, 2019 • 11:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Sonoco Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Roger Schrum, VP of Investor Relations. Thank you. Please go ahead, sir.
Thank you, Gigi, and good morning, everyone. Welcome to Sonoco's investor conference call to discuss our third quarter 2019 financial results.
Joining me today are Rob Tiede, President and Chief Executive Officer; and Julie Albrecht, Vice President and Chief Financial Officer. A news release reporting our financial results was issued before the market opened today and is available on the Investor Relations website at sonoco.com. In addition, we will reference a presentation on our third quarter results, which was also posted on our website, this morning.
Before we go further, let me remind you that today's call and presentation contains a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially.
Furthermore, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions as well as reconciliations of those measures to the most closely related GAAP measure, is also available in the Investor Relations section of our website.
Now with that, I'd like to turn it over to Julie.
Thank you, Roger. I'll begin on Slide 3, where you see that earlier this morning, we reported third quarter earnings per share on a GAAP basis of $0.91 and base earnings of $0.97 per share. This $0.97 of base EPS is well above the high end of our guidance range of $0.88 to $0.94 per share, as well as above our $0.86 of base EPS in the third quarter of last year.
We're pleased to have delivered solid operational results in a slumping global economic environment, and I'll add that our third quarter earnings benefited from the Corenso acquisition and from a lower-than-expected effective tax rate. Related to the $0.06 difference between base and GAAP EPS, $0.05 was due to restructuring activities, $0.05 relates to non-operating pension costs, and $0.03 is from M&A transaction costs. These non-base expenses were partially offset by a $0.07 non-cash gain driven by a reduction in a site-specific environmental reserve.
Now looking briefly at our base income on Slide 4, and starting with the top line, you see that sales were $1,354 million, down almost $11 million from the prior year period. I'll review more details about our key sales drivers on the sales bridge in just a moment. Gross profit was $265 million, approximately $6 million above the prior year quarter as gross profit as a percent of sales was solid at 19.6%.
SG&A expenses of $126 million were favorable year-over-year by $9 million, driven by cost reductions across the business,