Bemis Company, Inc. (NYSE:BMS) today reported first quarter 2014
diluted earnings of $0.48 per share, compared to $0.47 per share
for the same quarter of 2013. Excluding the items detailed in the
attached schedule, “Reconciliation of Non-GAAP Earnings per Share,”
adjusted diluted earnings for the first quarter of 2014 would have
been $0.58 per share, compared to $0.53 for the same quarter of
2013, an increase of 9.4 percent. Net sales for the first quarter
2014 were $1.2 billion. Excluding the impact of currency, sales
increased approximately one percent compared to the first quarter
of 2013.
“Bemis achieved record first quarter adjusted earnings per
share,” said Henry Theisen, Bemis Company’s Chairman and Chief
Executive Officer. “Our first quarter volumes are typically slower
as we prepare for the seasonally stronger spring and summer months.
This quarter, slightly lower sales volumes were driven by a
slowdown in customer demand due to recent weather events in North
America and inflationary pressures in Brazil. As we head into the
second quarter, we are pleased to see healthy customer order
levels, and we are commercializing new business at an accelerated
pace to support expected unit volume and profit margin growth in
2014.”
HIGHLIGHTS:
- Adjusted diluted earnings per share for
the first quarter increased 9.4 percent to $0.58, in line with
management’s guidance for the quarter.
- Management announced the planned
closure of a Pressure Sensitive Materials plant, resulting in a $25
million pre-tax charge in the first quarter, most of which impacted
Cost of Products Sold.
- Excluding the charge related to the
plant closure noted above, gross profit as a percentage of net
sales for the first quarter improved sequentially as compared to
the fourth quarter of 2013 and was consistent with first quarter
2013 levels.
- On March 31, 2014, Bemis completed the
sale of its Paper Packaging Division. A $9.4 million pre-tax gain
was recorded on the sale as part of other non-operating
income.
- Bemis repurchased approximately 1.1
million shares of its common stock at a cost of $43.2 million.
- Bemis increased its quarterly cash
dividend by 4 percent, the 31st consecutive annual increase.
- Management established adjusted diluted
earnings guidance for the second quarter of 2014 in the range of
$.61 to $.66 per share and confirmed total year 2014 earnings
guidance in the range of $2.40 to $2.55 per share.
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $738.2 million for the first quarter
2014 represented a decrease of 1.0 percent compared to the same
period of 2013. The prior year Clysar divestiture reduced sales by
2.2 percent. The remaining net sales increase was driven primarily
by the benefit of improved price and mix partially offset by a
modest decrease in unit sales volume.
U.S. Packaging operating profit for the first quarter of 2014
was $91.8 million, or 12.4 percent of net sales, compared to $86.0
million, or 11.5 percent of net sales, in the same period of 2013.
Excluding facility consolidation costs in 2013, segment adjusted
operating profit for 2013 would have been $95.4 million, or 12.8
percent of net sales. (See attached schedule: “Reconciliation of
Non-GAAP Operating Profit”.) The current period profit reflects the
impact of the modest decrease in unit sales volume.
Global Packaging
Global Packaging net sales for the first quarter 2014 of $356.8
million represented a decrease of 3.2 percent compared to the first
quarter of 2013. Currency translation decreased net sales by 8.4
percent, primarily driven by the Brazilian Real. The acquisition of
our extrusion platform in Foshan, China increased net sales by 4.6
percent. Excluding the impact of currency translation and
acquisition, the remaining increase in Global Packaging net sales
reflects the benefits of improved price and mix in 2014 partially
offset by lower unit sales volumes.
Global Packaging operating profit for the first quarter was
$24.1 million, or 6.8 percent of net sales, compared to $25.9
million, or 7.0 percent of net sales, for the same period in 2013.
Excluding the impact of facility consolidation program and
acquisition-related integration items, segment adjusted operating
profit would have been $25.3 million, or 6.9 percent of net sales
in 2013. (See attached schedule: “Reconciliation of Non-GAAP
Operating Profit”.) The net effect of currency translation
decreased operating profit during the first quarter of 2014 by $2.8
million.
Pressure Sensitive Materials
Pressure Sensitive Materials net sales totaled $142.8 million
for the first quarter, a 1.6 percent increase from the same period
in 2013. Currency translation increased net sales by 1.4 percent
compared to the prior year.
Costs associated with a plant closure negatively impacted
operating profit for the first quarter by $25 million, resulting in
a net operating loss of $14.5 million, compared to operating profit
of $7.7 million, or 5.5 percent of net sales, for the first quarter
of 2013. Excluding these plant closure costs, segment adjusted
operating profit for 2014 would have been $10.5 million, or 7.4
percent of net sales. (See attached schedule: “Reconciliation of
Non-GAAP Operating Profit”.) The increase in adjusted operating
profit during the period reflects strengthening demand in Europe
for value-added graphic products sold for advertising and
promotional applications and also improved global production
efficiencies.
CAPITAL STRUCTURE AND CASH FLOW
Net debt to adjusted EBITDA was 2.1 times at March 31,
2014, consistent with year-end 2013. Net debt is defined as total
debt less cash, and adjusted EBITDA is defined as last twelve
months adjusted operating income plus depreciation and
amortization. Cash flow from operations was $12.5 million for the
first quarter of 2014, reflecting the normal seasonality in first
quarter cash flows.
2014 OUTLOOK
Commenting on the rest of the year, Theisen stated, “Our outlook
for 2014 is unchanged. We continue to aggressively manage our
business to improve operating performance and deliver growth in
value-added products.”
Management expects adjusted diluted earnings per share for the
second quarter of 2014 to be in the range of $0.61 to $0.66.
Management confirmed its guidance for adjusted diluted earnings
per share for the full year 2014 in the range of $2.40 to $2.55 per
share. This includes an anticipated effective income tax rate for
2014 of approximately 35 percent. Management also confirmed that it
expects its total year 2014 cash provided by operating activities
to exceed $500 million and capital expenditures to be approximately
$175 million.
PRESENTATION OF NON-GAAP INFORMATION
This press release refers to non-GAAP financial measures:
adjusted operating profit, adjusted operating profit as a
percentage of net sales, net debt to adjusted EBITDA, and adjusted
diluted earnings per share. These non-GAAP financial measures
adjust for factors that are unusual or unpredictable. These
measures exclude the impact of certain amounts related to facility
consolidation and plant closure activities including
employee-related costs, equipment relocation costs, lease
termination payments, accelerated depreciation, and the write-down
of equipment. These measures also exclude gains on sales of
property and divestitures and certain acquisition related expenses
including transaction expenses, due diligence expenses,
professional and legal fees, purchase accounting adjustments for
inventory and order backlog, integration expenses, the cash portion
of any acquisition earn-out payments recorded as compensation
expenses, and changes in fair value of deferred acquisition
payments. This adjusted information should not be construed as an
alternative to results determined in accordance with accounting
principles generally accepted in the United States of America
(GAAP). It is provided solely to assist in an investor's
understanding of the impact of these items on the comparability of
the Company's on-going business operations.
FORWARD LOOKING STATEMENTS
Statements in this release that are not historical, including
statements relating to the expected future performance of the
Company, are considered “forward-looking” and are presented
pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. Such content is subject to certain risks and
uncertainties, including but not limited to future changes in cost
or availability of raw materials, our ability to adjust selling
prices, consumer buying patterns, changes in customer order
patterns, the results of competitive bid processes, costs
associated with the pursuit of acquisitions or divestitures, plant
closures, a failure in our information technology infrastructure or
applications, the funded status of our defined benefit plans,
foreign currency fluctuations, unexpected costs associated with
production relocation, changes in working capital requirements,
changes in government regulations, and the availability and related
cost of financing from banks and capital markets. Actual future
results and trends may differ materially from historical results or
those projected in any such forward-looking statements depending on
a variety of factors which are detailed in the Company's regular
SEC filings including the most recently filed Form 10-K for the
year ended December 31, 2013.
INVESTOR CONFERENCE CALL
Bemis Company, Inc. will webcast an investor telephone
conference regarding its first quarter 2014 financial results this
morning at 10 a.m., Eastern Time. Individuals may listen to the
call on the Internet at www.bemis.com under “Investor Relations.”
Listeners are urged to check the website ahead of time to ensure
their computers are configured for the audio stream. Instructions
for obtaining the required, free, downloadable software are
available in a pre-event system test on the site.
ABOUT BEMIS COMPANY, INC.
Bemis Company, Inc. is a major supplier of packaging and
pressure sensitive materials used by leading food, consumer
products, healthcare, and other companies worldwide. Founded in
1858, Bemis is included in the S&P 500 index of stocks and
reported 2013 net sales of $5.0 billion. Bemis has a strong
technical base in polymer chemistry, film extrusion, coating and
laminating, printing, and converting. Headquartered in Neenah,
Wisconsin, Bemis employs approximately 19,000 individuals
worldwide. More information about Bemis is available at our
website, www.bemis.com.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts) (unaudited)
Three Months Ended March 31,
2014 2013 Net sales $ 1,237.8 $ 1,255.0
Cost of products sold 1,023.2 1,013.2 Gross profit
214.6 241.8 Operating expenses: Selling, general and
administrative expenses 122.7 130.6 Research and development 13.1
11.3 Facility consolidation and other costs — 9.3 Other operating
income (0.4 ) (1.5 ) Operating income 79.2 92.1
Interest expense 16.9 16.6 Other non-operating (income) expense
(12.6 ) 4.1 Income before income taxes 74.9 71.4
Provision for income taxes 25.7 22.1
Net income $ 49.2 $ 49.3 Basic earnings per
share $ 0.48 $ 0.48 Diluted earnings per share
$ 0.48 $ 0.47 Cash dividends paid per share $
0.27 $ 0.26 Weighted average shares
outstanding (including participating securities): Basic 101.5 103.3
Diluted 102.4 104.4
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions) (unaudited)
March 31,
December 31, 2014 2013
ASSETS
Cash and cash equivalents $ 152.2 $ 141.7 Accounts
receivable, net 654.1 615.4 Inventories 665.9 648.5 Prepaid
expenses and other current assets 110.5 98.9 Total
current assets 1,582.7 1,504.5 Property and
equipment, net 1,242.7 1,284.3 Goodwill
1,046.3 1,052.2 Other intangible assets, net 187.0 190.6 Deferred
charges and other assets 89.5 78.6 Total other
long-term assets 1,322.8 1,321.4
TOTAL
ASSETS $ 4,148.2 $ 4,110.2
LIABILITIES
Current portion of long-term debt $ 0.1 $ 0.2 Short-term
borrowings 18.4 14.7 Accounts payable 395.0 362.8 Accrued salaries
and wages 84.3 99.6 Accrued income and other taxes 56.7 32.3 Other
current liabilities 90.5 92.3 Total current
liabilities 645.0 601.9 Long-term debt, less current portion
1,441.5 1,421.4 Deferred taxes 258.5 269.8 Other liabilities and
deferred credits 126.2 132.3
TOTAL
LIABILITIES 2,471.2 2,425.4
EQUITY
Bemis Company, Inc. shareholders’ equity: Common stock
issued (128.0 and 127.9 shares, respectively) 12.8 12.8 Capital in
excess of par value 550.5 548.1 Retained earnings 2,026.8 2,005.1
Accumulated other comprehensive loss (87.4 ) (98.7 )
Common stock held in treasury (27.1 and
26.0 shares at cost, respectively)
(825.7 ) (782.5 )
TOTAL EQUITY 1,677.0 1,684.8
TOTAL LIABILITIES AND EQUITY $ 4,148.2 $
4,110.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions) (unaudited)
Three Months Ended March 31, 2014
2013
Cash flows from
operating activities
Net income $ 49.2 $ 49.3 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 47.6 49.2 Excess tax benefit from share-based payment
arrangements (0.4 ) — Share-based compensation 3.5 4.5 Deferred
income taxes (12.5 ) 5.8 Income of unconsolidated affiliated
company (0.4 ) (0.6 ) Loss on sale of property and equipment — 0.2
Net facility consolidation and other costs — (1.7 ) Gain on
divestiture (9.4 ) — Changes in working capital, excluding effect
of acquisitions, divestitures and currency (56.8 ) (100.7 ) Changes
in other assets and liabilities (8.3 ) 2.4 Net cash
provided by operating activities 12.5 8.4
Cash flows from
investing activities
Additions to property and equipment (33.5 ) (27.2 ) Business
acquisitions and adjustments, net of cash acquired — 0.2 Proceeds
from sale of property and equipment 2.5 0.3 Proceeds from
divestiture 79.8 — Net cash provided by (used
in) investing activities 48.8 (26.7 )
Cash flows from
financing activities
Repayment of long-term debt — — Net borrowing of commercial paper
13.3 129.2 Net borrowing of short-term debt 5.1 0.1 Cash dividends
paid to shareholders (27.5 ) (27.2 ) Common stock purchased for the
treasury (43.2 ) (35.6 ) Excess tax benefit from share-based
payment arrangements 0.4 — Stock incentive programs and related tax
withholdings (1.5 ) (12.7 ) Net cash (used in) provided by
financing activities (53.4 ) 53.8 Effect of exchange
rates on cash and cash equivalents 2.6 3.1 Net
increase in cash and cash equivalents 10.5 38.6 Cash and
cash equivalents balance at beginning of year 141.7 114.1
Cash and cash equivalents balance at end of period $
152.2 $ 152.7
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions) (unaudited)
Three Months Ended March 31, 2014
2013 U.S. Packaging Operating profit before facility
consolidation and other costs $ 91.8 $ 95.4 Facility consolidation
and other costs — (9.4 ) Operating profit 91.8 86.0
Global Packaging Operating profit before facility
consolidation and other costs 24.1 25.8 Facility consolidation and
other costs — 0.1 Operating profit 24.1 25.9
Pressure Sensitive Materials Operating (loss) profit (14.5 )
7.7 Segment operating profit 101.4 119.6
Corporate General corporate expenses (22.2 ) (27.5 )
Operating income 79.2 92.1 Interest expense 16.9 16.6
Other non-operating (income) expense (12.6 ) 4.1
Income before income taxes $ 74.9 $ 71.4
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions, except per share amounts) (unaudited)
Three Months Ended March 31,
2014 2013 U.S. Packaging Net
sales $ 738.2 $ 746.0 Operating profit as
reported $ 91.8 $ 86.0 Non-GAAP adjustments: Facility
consolidation and other costs (1) — 9.4
Operating profit as adjusted $ 91.8 $ 95.4
Operating profit as a percentage of net sales As reported 12.4 %
11.5 % As adjusted 12.4 % 12.8 %
Global Packaging Net
sales $ 356.8 $ 368.5 Operating profit as
reported $ 24.1 $ 25.9 Non-GAAP adjustments: Facility
consolidation and other costs (1) — (0.1 ) Acquisition-related
integration costs (2) — (0.5 ) Operating profit as
adjusted $ 24.1 $ 25.3 Operating profit as a
percentage of net sales As reported 6.8 % 7.0 % As adjusted 6.8 %
6.9 %
Pressure Sensitive Materials Net sales $ 142.8
$ 140.5 Operating (loss) profit as reported $
(14.5 ) $ 7.7 Non-GAAP adjustments: Plant closure (3) 25.0
— Operating profit as adjusted $ 10.5 $
7.7 Operating (loss) profit as a percentage of net
sales As reported (10.2 )% 5.5 % As adjusted 7.4 % 5.5 % (1)
Facility consolidation and other costs includes employee-related
costs, accelerated depreciation, write down of equipment and other
costs related to the Company's facility consolidation program. (2)
Acquisition related integration costs include earnout payments
treated as compensation expense related to the Mayor Packaging
acquisition. (3) Includes employee-related costs (including an
estimate for a multiemployer plan settlement), accelerated
depreciation, and other costs related to closing our plant in Stow,
Ohio (a Pressure Sensitive Materials manufacturing facility).
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP EARNINGS PER SHARE
(unaudited)
Three Months Ended March
31, 2014 2013 Diluted earnings per
share, as reported $ 0.48 $ 0.47 Non-GAAP adjustments per
share, net of taxes: Facility consolidation and other costs (1) —
0.06 Pressure Sensitive Materials plant closure (2) 0.16 — Gain on
divestiture (3) (0.06 ) — Diluted earnings per share, as
adjusted $ 0.58 $ 0.53 (1) Facility consolidation and
other costs includes employee-related costs, accelerated
depreciation, write down of equipment and other costs related to
the Company's facility consolidation program. (2) Includes
employee-related costs (including an estimate for a multiemployer
plan settlement), accelerated depreciation, and other costs related
to closing our plant in Stow, Ohio (a Pressure Sensitive Materials
manufacturing facility). (3) Gain on divestiture relates to the
sale of the Paper Packaging Division.
Bemis Company, Inc.Erin M. Winters, 920-527-5288Director,
Investor Relations
Bemis (NYSE:BMS)
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