HIGHLIGHTS OF THE
QUARTER:
- Diluted EPS from continuing operations
increased to a record $0.61 per share, up 10.9 percent compared to
adjusted diluted earnings per share from continuing operations of
$0.55 for the prior third quarter.
- Total Bemis Company adjusted diluted
EPS increased 11.7 percent to a record $0.67 per share, in line
with management’s guidance.
- Excluding the impact of currency and
divestitures, net sales increased 2.5 percent.
- In the U.S. Packaging segment, adjusted
operating profit as a percentage of net sales increased to 13.3
percent, compared to 13.0 percent in the prior third quarter.
- In the Global Packaging segment,
operating profit as a percentage of net sales increased to
8.6 percent, compared to 7.6 percent in the prior third
quarter.
- During the third quarter, the Company
entered into an agreement to sell its Pressure Sensitive Materials
business segment. The results of this segment are reported as
discontinued operations.
Bemis Company, Inc. (NYSE:BMS) today reported third quarter 2014
diluted earnings per share from continuing operations of $0.61 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 per share from continuing operations for the third quarter
of 2013 would have been $0.55.
“Our record third quarter results reflect continued progress in
the implementation of our long-term strategy,” said William Austen,
Bemis Company’s President and Chief Executive Officer. “Our Global
Packaging business delivered solid operating profit improvement,
driven by our strong pricing discipline and unit volume growth in
our high margin target end markets around the world. In our U.S.
Packaging business, operating margins increased and we continued to
commercialize new business awards. As we move forward, we are
focused on further improving performance metrics through continued
pricing discipline, capacity investments, and operational
improvements that will deliver more efficient scale-up of our
growth projects.”
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $716.7 million for the third quarter
of 2014 represented a decrease of 4.5 percent, compared to the
same period of 2013. The first quarter 2014 divestiture of the
Paper Packaging Division reduced sales by 5.6 percent. Excluding
the impact of divestitures, the 1.1 percent increase in net sales
reflects the benefit of increased selling prices and improved sales
mix.
U.S. Packaging operating profit for the third quarter of 2014
was $95.3 million, or 13.3 percent of net sales, compared to $81.8
million, or 10.9 percent of net sales, in the same period of 2013.
Excluding facility consolidation costs in 2013, segment adjusted
operating profit would have been $97.6 million, or 13.0 percent of
net sales. (See attached schedule: “Reconciliation of Non-GAAP
Operating Profit.”) Operating profit results reflect the benefit of
sales mix improvements and the adverse impact of costs and
manufacturing inefficiencies related to the commercialization of
new business.
Global Packaging
Global Packaging net sales for the third quarter of 2014 of
$381.5 million represented an increase of 2.9 percent, compared to
the third quarter of 2013. Currency translation decreased net sales
by 2.5 percent. Excluding the impact of currency translation,
Global Packaging net sales increased 5.4 percent from the
prior year, reflecting unit volume growth in addition to favorable
sales price and mix.
Global Packaging operating profit for the third quarter was
$32.9 million, or 8.6 percent of net sales, compared to $28.3
million, or 7.6 percent of net sales, for the same period in 2013.
The net effect of currency translation decreased operating profit
during the third quarter of 2014 by $1.0 million. Margin
improvement in this segment reflects the favorable impact of
increased sales of value-added packaging for medical device,
pharmaceutical, and perishable food applications.
DISCONTINUED OPERATIONS
On September 8, 2014, the Company entered into an agreement to
sell its Pressure Sensitive Materials business segment. Management
expects the transaction to close during the fourth quarter of 2014.
Considering the agreed upon price, management recorded a non-cash
impairment charge to goodwill. The results of this segment and the
impairment charge related to the transaction are reported as
discontinued operations.
CAPITAL STRUCTURE AND CASH FLOW
Total company net debt to adjusted EBITDA was 2.1 times at
September 30, 2014, slightly above our target ratio of 2.0
times. Net debt is defined as total debt less cash, and adjusted
EBITDA is defined as last twelve months adjusted total company
operating income plus depreciation and amortization.
Cash flow from operations for the quarter of $121.1 million
compared to $160.0 million for third quarter of 2013, reflecting
generally higher levels of working capital associated with higher
raw material costs, increased inventory levels, and higher selling
prices. These working capital increases support new product
commercialization and strong customer demand for value-added
products.
On August 1, 2014, public notes totaling $400 million matured.
Management refinanced these notes with lower interest rate debt,
comprised of a $200 million bank term loan that matures in 2022 and
$200 million of commercial paper.
2014 OUTLOOK
In anticipation of the sale of the Pressure Sensitive Materials
business segment, management established new guidance for
continuing operations. Management expects adjusted diluted earnings
per share from continuing operations to be in the range of $0.53 to
$0.58 for the fourth quarter and in the range of $2.26 to $2.31 for
the full year 2014. Considering the results of discontinued
operations, management’s new full year guidance range is consistent
with the middle of its previously stated full year guidance
range.
Management revised the guidance for total year 2014 cash from
operations to reflect inflation, the timing of the Pressure
Sensitive Materials divestiture, and generally higher levels of
working capital expected to support new product commercialization
and strong customer demand for value-added products. Full year 2014
cash flow from operating activities is expected to be in the range
of $375 million to $400 million.
Management continues to expect the effective income tax rate for
the full year 2014 to be approximately 34.5 percent and total year
2014 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 or losses 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 ongoing 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 general economic
conditions, 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
business combinations or divestitures, plant closures, a failure in
our information technology infrastructure or applications, 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 third quarter 2014 financial results this
morning at 11 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 Company is included in the S&P 500 index of stocks
and reported 2013 net sales of $4.5 billion from continuing
operations. 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 September
30,
Nine Months Ended September 30,
2014 2013 2014 2013 Net
sales $ 1,098.2 $ 1,121.5 $ 3,290.8 $ 3,391.3 Cost of products sold
877.5 897.3 2,640.2 2,723.3 Gross
profit 220.7 224.2 650.6 668.0 Operating expenses: Selling,
general and administrative expenses 104.6 112.8 315.6 343.5
Research and development 11.2 10.7 33.4 30.1 Facility consolidation
and other costs — 15.8 — 46.0 Other operating income (2.4 ) (2.7 )
(7.6 ) (7.6 ) Operating income 107.3 87.6 309.2 256.0
Interest expense 14.0 17.0 47.9 50.6 Other non-operating income
(1.2 ) (3.4 ) (15.6 ) (6.3 ) Income from continuing
operations before income taxes 94.5 74.0 276.9 211.7
Provision for income taxes 33.0 25.1 95.0 69.5
Income from continuing operations 61.5 48.9 181.9
142.2 (Loss) income from discontinued operations, net of tax
(44.5 ) 5.1 (49.9 ) 14.2 Net income $ 17.0
$ 54.0 $ 132.0 $ 156.4
Basic
earnings per share: Income from continuing operations $ 0.62 $
0.47 $ 1.81 $ 1.38 (Loss) income from discontinued operations (0.45
) 0.05 (0.50 ) 0.14 Net income $ 0.17 $ 0.52
$ 1.31 $ 1.52
Diluted earnings per
share: Income from continuing operations $ 0.61 $ 0.47 $ 1.79 $
1.36 (Loss) income from discontinued operations (0.44 ) 0.05
(0.49 ) 0.14 Net income $ 0.17 $ 0.52 $ 1.30
$ 1.50 Cash dividends paid per share $ 0.27
$ 0.26 $ 0.81 $ 0.78 Weighted
average shares outstanding (including participating securities):
Basic 99.9 103.0 100.6 103.1 Diluted 100.9 104.0 101.5 104.1
BEMIS
COMPANY, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions)
(unaudited)
September 30,2014
December 31,2013
ASSETS
Cash and cash equivalents $ 126.1 $ 141.7 Accounts
receivable, net 562.0 615.4 Inventories 594.9 648.5 Prepaid
expenses and other current assets 118.0 98.9 Assets held for sale
249.8 — Total current assets 1,650.8 1,504.5
Property and equipment, net 1,128.8 1,284.3
Goodwill 978.5 1,052.2 Other intangible assets, net
175.3 190.6 Deferred charges and other assets 87.4 78.6
Total other long-term assets 1,241.2 1,321.4
TOTAL ASSETS $ 4,020.8 $ 4,110.2
LIABILITIES
Current portion of long-term debt $ — $ 0.2 Short-term
borrowings 17.9 14.7 Accounts payable 321.0 362.8 Accrued salaries
and wages 85.3 99.6 Accrued income and other taxes 42.1 32.3 Other
current liabilities 73.1 92.3 Liabilities held for sale 87.0
— Total current liabilities 626.4 601.9 Long-term
debt, less current portion 1,432.9 1,421.4 Deferred taxes 252.5
269.8 Other liabilities and deferred credits 114.0 132.3
TOTAL LIABILITIES 2,425.8 2,425.4
EQUITY
Common stock issued (128.0 and 127.9 shares, respectively)
12.8 12.8 Capital in excess of par value 556.6 548.1 Retained
earnings 2,054.9 2,005.1 Accumulated other comprehensive loss
(162.7 ) (98.7 ) Common stock held in treasury (28.1 and 26.0
shares at cost, respectively) (866.6 ) (782.5 )
TOTAL
EQUITY 1,595.0 1,684.8
TOTAL
LIABILITIES AND EQUITY $ 4,020.8 $ 4,110.2
BEMIS
COMPANY, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Nine Months Ended September 30, 2014
2013
Cash flows from
operating activities
Net income $ 132.0 $ 156.4 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 139.0 143.5 Excess tax benefit from share-based
payment arrangements (0.6 ) — Share-based compensation 9.4 15.1
Deferred income taxes (18.0 ) 13.9 Income of unconsolidated
affiliated company (1.0 ) (2.5 ) Non-cash impairment charge for net
assets held for sale 44.7 — Loss on sale of property and equipment
0.1 0.4 Net facility consolidation and other costs — 6.7 Gain on
divestitures (9.3 ) (5.5 ) Changes in working capital, excluding
effect of acquisitions, divestitures and currency (101.9 ) (38.9 )
Changes in other assets and liabilities (2.9 ) (26.7 ) Net
cash provided by operating activities 191.5 262.4
Cash flows from
investing activities
Additions to property and equipment (112.7 ) (90.3 ) Business
acquisitions and adjustments, net of cash acquired — (56.3 )
Proceeds from sale of property and equipment 7.9 10.7 Proceeds from
divestitures 79.8 30.4 Net cash used in
investing activities (25.0 ) (105.5 )
Cash flows from
financing activities
Proceeds from issuance of long-term debt 199.4 — Repayment of
long-term debt (399.8 ) — Net borrowing of commercial paper 202.8
17.7 Net borrowing (repayment) of short-term debt 7.4 (2.4 ) Cash
dividends paid to shareholders (81.6 ) (80.8 ) Common stock
purchased for the treasury (84.1 ) (35.6 ) Deferred payments for
business acquisitions (6.6 ) — Excess tax benefit from share-based
payment arrangements 0.6 — Stock incentive programs and related tax
withholdings (1.5 ) (13.5 ) Net cash used in financing
activities (163.4 ) (114.6 ) Effect of exchange rates on
cash and cash equivalents (8.7 ) (0.8 ) Cash and cash
equivalents classified as held for sale assets (10.0 ) —
Net (decrease) increase in cash and cash equivalents (15.6 )
41.5 Cash and cash equivalents balance at beginning of year
141.7 114.1 Cash and cash equivalents balance
at end of period $ 126.1 $ 155.6
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions)
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014 2013
U.S. Packaging Operating profit before facility
consolidation and other costs $ 95.3 $ 97.6 $ 288.1 $ 294.5
Facility consolidation and other costs — (15.8 ) —
(46.4 ) Operating profit 95.3 81.8 288.1 248.1
Global
Packaging Operating profit before facility consolidation and
other costs 32.9 28.3 83.6 81.2 Facility consolidation and other
costs — — — 0.4 Operating profit 32.9
28.3 83.6 81.6 Segment operating profit 128.2 110.1 371.7
329.7
Corporate General corporate expenses (20.9 )
(22.5 ) (62.5 ) (73.7 ) Operating income 107.3 87.6 309.2
256.0 Interest expense 14.0 17.0 47.9 50.6 Other
non-operating income (1.2 ) (3.4 ) (15.6 ) (6.3 )
Income
from continuing operations before income taxes $ 94.5 $
74.0 $ 276.9 $ 211.7
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions, except per share
amounts)
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014 2013
U.S. Packaging Net sales $ 716.7 $ 750.7 $
2,180.7 $ 2,277.6 Operating profit as reported
$ 95.3 $ 81.8 $ 288.1 $ 248.1 Non-GAAP adjustments: Facility
consolidation and other costs (1) — 15.8 —
46.4 Operating profit as adjusted $ 95.3 $
97.6 $ 288.1 $ 294.5 Operating profit
as a percentage of net sales As reported 13.3 % 10.9 % 13.2 % 10.9
% As adjusted 13.3 % 13.0 % 13.2 % 12.9 %
Global
Packaging Net sales $ 381.5 $ 370.8 $ 1,110.1
$ 1,113.7 Operating profit as reported $ 32.9
$ 28.3 $ 83.6 $ 81.6 Non-GAAP adjustments: Facility
consolidation and other costs (1) — — — (0.4 ) Acquisition-related
integration costs (2) — — — (0.5 )
Operating profit as adjusted $ 32.9 $ 28.3 $ 83.6
$ 80.7 Operating profit as a percentage of net
sales As reported 8.6 % 7.6 % 7.5 % 7.3 % As adjusted 8.6 % 7.6 %
7.5 % 7.2 % (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.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP EARNINGS PER SHARE
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014 2013
Continuing Operations Diluted earnings per share, as
reported $ 0.61 $ 0.47 $ 1.79 $ 1.36 Non-GAAP adjustments
per share, net of taxes: Facility consolidation and other costs (1)
— 0.10 — 0.29 Gain on divestitures (2) — — (0.06 ) (0.03 ) Gain on
sale of land and building (3) — (0.02 ) — (0.02 )
Diluted earnings per share, as adjusted $ 0.61 $ 0.55
$ 1.73 $ 1.60
Discontinued
Operations Diluted earnings per share, as reported $ (0.44 ) $
0.05 $ (0.49 ) $ 0.14 Non-GAAP adjustments per share, net of
taxes: Pressure Sensitive Materials plant closure costs (4) — —
0.16 — Non-cash impairment for net assets held for sale (5) 0.50
— 0.50 — Diluted earnings per
share, as adjusted $ 0.06 $ 0.05 $ 0.17 $ 0.14
Bemis Company Inc.
Diluted earnings per share, as adjusted
$ 0.67 $ 0.60 $ 1.90 $ 1.74
(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) Gain on divestitures relates to the sale
of the Paper Packaging Division in 2014 and Clysar in 2013. (3)
Gain on sale of land and building relates to final settlement
associated with a property that was not part of our facility
consolidation program. (4) Includes employee-related costs
(including a multiemployer plan settlement), accelerated
depreciation, and other costs related to closing our plant in Stow,
Ohio (a Pressure Sensitive Materials manufacturing facility). (5)
Non-cash impairment for net assets held for sale is to write down
the carrying value of the assets held for sale to estimated fair
value less any costs to sell.
Bemis Company Inc.Erin M. Winters,
920-527-5288Director, Investor Relations
Bemis (NYSE:BMS)
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