Strong Margin Improvement; Increased Return on Invested Capital;
Record Operating Cash Flow for the full year
HIGHLIGHTS:
- Full year 2015 adjusted diluted EPS
from continuing operations increased to $2.55 per share, up 10.9
percent compared to the prior year, and in line with management’s
guidance. These results were achieved despite the currency
translation headwinds of approximately $0.16 per share in 2015, as
compared to the prior year.
- Gross profit margins improved 170 basis
points to 21.5 percent of net sales for the full year 2015,
compared to 19.8 percent in the prior year.
- U.S. Packaging segment operating profit
return on sales increased to 14.3 percent for the full year 2015,
compared to 13.1 percent in the prior year.
- Global Packaging segment adjusted
operating profit return on sales increased to 8.8 percent for the
full year 2015, compared to 7.6 percent in the prior year.
- Adjusted return on invested capital
increased to 10.5 percent at December 31, 2015, compared to 9.7
percent at December 31, 2014.
- Cash flow from operations for the
twelve months ended December 31, 2015 was $552.4 million, compared
to $248.1 million in the prior year.
- On December 1, 2015, Bemis announced
its acquisition of the rigid plastic packaging operations of Emplal
Participações S.A.
- Management set guidance for the full
year 2016:
- Adjusted diluted earnings per share in
the range of $2.68 to $2.83.
- Capital expenditures expected to be
approximately $200 million.
- Cash flow from operations expected to
be in the range of $450 to $500 million.
Bemis Company, Inc. (NYSE:BMS) today reported fourth quarter
2015 diluted earnings per share from continuing operations of
$0.58. Excluding the effect of restructuring and
acquisition-related costs detailed in the attached schedule,
“Reconciliation of Non-GAAP Earnings Per Share,” adjusted diluted
earnings per share from continuing operations would have been $0.60
in 2015 and $0.57 in 2014, an increase of 5.3 percent. The net
impact of currency translation decreased earnings per share in the
fourth quarter of 2015 by approximately $0.04, as compared to the
prior fourth quarter.
For the full year 2015, the Company reported diluted earnings
per share from continuing operations of $2.47 compared to $2.36 per
share for the full year 2014. Excluding the effect of restructuring
and acquisition-related costs detailed in the attached schedule,
“Reconciliation of Non-GAAP Earnings Per Share,” adjusted diluted
earnings per share from continuing operations would have been $2.55
in 2015 and $2.30 in 2014, an increase of 10.9 percent. The net
impact of currency translation decreased earnings per share in 2015
by approximately $0.16, as compared to the prior year.
“We delivered very strong financial results this year,
consistently increasing margins, return on invested capital, and
cash from operations. We achieved record adjusted earnings per
share, a double-digit percent increase compared to last year, in
the face of significant currency translation headwinds,” said
William F. Austen, Bemis Company’s President and Chief Executive
Officer. “We are executing with focus, alignment, and rigor as we
continue progressing toward our long-term financial targets. As we
enter 2016, we will continue to improve sales mix and invest
capital strategically for growth and productivity projects.
Consistent with our strategy, this will support our focus on
increasing value for our shareholders.”
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $2,747.5 million for 2015 represent
a decrease of 4.0 percent, compared to 2014. The first quarter 2014
divestiture of the Paper Packaging Division reduced sales by 1.3
percent. Excluding the impact of divestitures, net sales decreased
by 2.7 percent. Unit volumes declined by approximately 2 percent
for the full year, primarily from the impact of the Company’s
strategic pricing decisions. The remaining change in net sales was
driven by the contractual pass through of lower raw material costs
throughout the year, partially offset by favorable sales mix.
U.S. Packaging operating profit increased to $391.8 million in
2015, or 14.3 percent of net sales, compared to $375.8 million, or
13.1 percent of net sales, in 2014. This margin improvement
reflects sales mix benefits, driven by the Company’s focus on
innovation, as well as continued operational improvements,
primarily attributable to the Company’s asset recapitalization
program.
Global Packaging
Global Packaging net sales of $1,323.9 million for 2015
represent a decrease of 10.7 percent, compared to 2014. Currency
translation reduced net sales by 18.2 percent, primarily due to
currencies in Latin America. The December 2015 acquisition of
Emplal increased full year net sales by 0.3 percent. Excluding the
impact of currency translation and the acquisition, net sales
increased by 7.2 percent, fully driven by positive sales price and
mix.
Global Packaging operating profit was $107.1 million in 2015,
compared to $113.3 million in 2014. Excluding restructuring and
acquisition-related costs, segment adjusted operating profit for
2015 would have been $116.5 million, or 8.8 percent of net sales,
an increase from 7.6 percent of net sales in 2014. (See attached
schedule: “Reconciliation of Non-GAAP Operating Profit.”) The net
impact of currency translation reduced operating profit during 2015
by $24.0 million as compared to 2014, or approximately $0.16 of
total Company earnings per share, primarily due to currencies in
Latin America.
Margin improvement in the Global Packaging segment reflects
strong operating performance and the overall favorable impact of
increased sales of sophisticated, value-added packaging.
CASH FLOW AND CAPITAL STRUCTURE
Cash flow from operations for the twelve months ended December
31, 2015 was $552.4 million, compared to $248.1 million in the
prior year. The fourth quarter contributed $140.4 million of
operating cash flow, compared to $56.6 million for the prior fourth
quarter. Strong cash flow was driven by continued disciplined
management of working capital.
Total company net debt to adjusted EBITDA was 2.3 times at
December 31, 2015. Net debt is defined as total debt less
cash, and adjusted EBITDA is defined as the last twelve months
total company adjusted operating income plus depreciation and
amortization.
Capital expenditures totaled $219.4 million for the full year
2015, reflecting increased investment in new capacity to support
growth initiatives and productivity improvements.
During the fourth quarter, Bemis repurchased 1.0 million shares,
for a total of $45.8 million. For the full year 2015, the Company
repurchased 3.3 million shares for $150.1 million. At
December 31, 2015, the remaining Board authorization for the
repurchase of Bemis common stock was 3.4 million shares.
2016 OUTLOOK
Commenting on the year ahead, Austen stated, “In 2016, we expect
our growth initiatives and asset recapitalization projects to
deliver continued margin improvement. Our EPS guidance is in line
with our long-term target to deliver earnings per share improvement
in excess of 10 percent per year, on a currency-neutral basis.
During 2016, we will continue to focus on growing our business,
improving margins, increasing return on invested capital, and
generating cash.”
Management expects adjusted diluted earnings per share to be in
the range of $2.68 to $2.83 for the full year 2016, which includes
currency translation headwinds of approximately $0.10, based on
current exchange rate levels, as compared to the prior year.
Management expects an effective income tax rate for 2016 of
slightly above 33 percent.
Management expects full year cash from operations to be in the
range of $450 to $500 million. This includes continued reductions
in working capital that are expected to meet the Company’s
objective of working capital as a percent of net sales in the range
of 14 to 16 percent by the end of 2016.
Management expects capital expenditures for 2016 of
approximately $200 million to support productivity and efficiency
projects as well as growth projects driven by increased customer
demand for value-added products.
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, adjusted
return on invested capital, 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, accelerated depreciation, and the write-down of equipment.
These measures also exclude gains or losses on sales of significant
property and divestitures, certain litigation matters, and certain
acquisition-related expenses, including transaction expenses, due
diligence expenses, professional and legal fees, purchase
accounting adjustments for inventory and order backlog, 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, the ability to adjust selling prices, consumer buying
patterns, changes in customer order patterns, potential loss of
business or increased costs due to customer or vendor
consolidation, the results of competitive bid processes, costs
associated with the pursuit of business combinations or
divestitures, plant closures, a failure in our information
technology applications or infrastructure, foreign currency
fluctuations, 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, 2014.
INVESTOR CONFERENCE CALL
Bemis Company, Inc. will webcast an investor telephone
conference regarding its fourth quarter 2015 financial results this
morning at 12 p.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. (“Bemis” or the “Company”) is a major
supplier of flexible packaging used by leading food, consumer
products, healthcare, and other companies worldwide. Founded in
1858, Bemis reported 2015 net sales from continuing operations of
$4.1 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 17,000 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 Twelve Months Ended December
31, December 31, 2015 2014
2015 2014 Net sales $ 982.7 $ 1,052.7 $
4,071.4 $ 4,343.5 Cost of products sold 769.8 844.2
3,198.0 3,484.4 Gross profit 212.9 208.5 873.4 859.1
Operating expenses: Selling, general and administrative
expenses 107.9 101.0 420.0 416.6 Research and development 10.3 10.7
44.1 44.1 Restructuring and acquisition-related costs 2.2 — 12.1 —
Other operating income (4.7 ) (1.7 ) (12.4 ) (9.3 )
Operating income 97.2 98.5 409.6 407.7 Interest expense 13.2
12.9 51.7 60.8 Other non-operating income (1.2 ) (1.2 ) (6.0 )
(16.8 ) Income from continuing operations before income
taxes 85.2 86.8 363.9 363.7 Provision for income taxes 28.4
29.6 122.0 124.6 Income from
continuing operations 56.8 57.2 241.9 239.1 Income (loss)
from discontinued operations —
1.9
(2.6 ) (48.0 ) Net income $ 56.8 $ 59.1
$ 239.3 $ 191.1
Basic earnings per
share: Income from continuing operations $ 0.59 $ 0.58 $ 2.50 $
2.39 Income (loss) from discontinued operations — 0.02
(0.03 ) (0.48 ) Net income $ 0.59 $ 0.60 $
2.47 $ 1.91
Diluted earnings per share:
Income from continuing operations $ 0.58 $ 0.57 $ 2.47 $ 2.36
Income (loss) from discontinued operations — 0.02
(0.03 ) (0.47 ) Net income $ 0.58 $ 0.59 $ 2.44
$ 1.89 Cash dividends paid per share $ 0.28
$ 0.27 $ 1.12 $ 1.08 Weighted
average shares outstanding (including participating securities):
Basic 95.6 99.1 96.7 100.2 Diluted 97.1 100.3 97.9 101.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions)
(unaudited)
December 31, December 31, 2015
2014 (1)
ASSETS
Cash and cash equivalents $ 59.2 $ 47.1 Trade receivables
451.3 496.3 Inventories 525.9 575.8 Prepaid expenses and other
current assets 82.6 168.6 Total current assets
1,119.0 1,287.8 Property and equipment, net
1,206.3 1,142.9 Goodwill 949.5 963.1 Other
intangible assets, net 149.8 168.6 Deferred charges and other
assets 65.2 48.4 Total other long-term assets 1,164.5
1,180.1
TOTAL ASSETS $ 3,489.8 $
3,610.8
LIABILITIES
Current portion of long-term debt $ 5.8 $ — Short-term
borrowings 29.6 31.3 Accounts payable 334.8 268.2 Employee-related
liabilities 93.3 90.8 Accrued income and other taxes 35.2 23.3
Other current liabilities 90.4 67.8 Total current
liabilities 589.1 481.4 Long-term debt, less
current portion 1,353.9 1,311.6 Deferred taxes 172.4 223.4 Other
liabilities and deferred credits 167.0 161.4
TOTAL LIABILITIES 2,282.4 2,177.8
EQUITY
Common stock issued (128.2 and 128.0 shares, respectively)
12.8 12.8 Capital in excess of par value 573.2 559.7 Retained
earnings 2,216.0 2,086.8 Accumulated other comprehensive loss
(509.9 ) (291.7 ) Common stock held in treasury (33.1 and 29.8
shares at cost, respectively) (1,084.7 ) (934.6 )
TOTAL
EQUITY 1,207.4 1,433.0
TOTAL
LIABILITIES AND EQUITY $ 3,489.8 $ 3,610.8
(1)
The December 31, 2014 balance sheet includes
reclassification adjustments to maintain comparability with the
December 31, 2015 balance sheet. These reclassifications include
moving other receivables into "Prepaid expenses and other current
assets" and adjustments required by new accounting standards. These
changes had no impact to operating cash flow.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Twelve Months Ended December 31, 2015
2014
Cash flows from
operating activities
Net income $ 239.3 $ 191.1 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 158.1 180.6 Excess tax benefit from share-based
payment arrangements (1.9 ) (0.7 ) Share-based compensation 18.4
12.4 Deferred income taxes 14.2 (0.5 ) Income of unconsolidated
affiliated company (1.9 ) (1.7 ) Cash dividends received from
unconsolidated affiliated company 1.7 — Non-cash impairment charge
of discontinued operations 3.2 44.7 Gain on sale of property and
equipment (1.9 ) (0.6 ) Gain on divestitures — (9.3 ) Changes in
working capital, excluding effect of acquisitions, divestitures and
currency 124.9 (150.2 ) Changes in other assets and liabilities
(1.7 ) (17.7 ) Net cash provided by operating activities
552.4 248.1
Cash flows from
investing activities
Additions to property and equipment (219.4 ) (185.2 ) Business
acquisitions and adjustments, net of cash acquired (66.4 ) —
Proceeds from sale of property and equipment 9.6 10.1 Proceeds from
divestitures 13.6 215.6 Net cash (used in)
provided by investing activities (262.6 ) 40.5
Cash flows from
financing activities
Proceeds from issuance of long-term debt 2.0 199.4 Repayment of
long-term debt (0.9 ) (400.2 ) Net borrowing of commercial paper
12.2 76.8 Net (repayment) borrowing of short-term debt (9.6 ) 21.1
Cash dividends paid to shareholders (109.7 ) (108.4 ) Common stock
purchased for the treasury (150.1 ) (152.1 ) Deferred payments for
business acquisitions (4.3 ) (6.6 ) Excess tax benefit from
share-based payment arrangements 1.9 0.7 Stock incentive programs
and related tax withholdings (6.8 ) (1.5 ) Net cash used in
financing activities (265.3 ) (370.8 ) Effect of exchange
rates on cash and cash equivalents (12.4 ) (12.4 ) Net
increase (decrease) in cash and cash equivalents 12.1 (94.6 )
Cash and cash equivalents balance at beginning of year 47.1
141.7 Cash and cash equivalents balance at end
of period $ 59.2 $ 47.1
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, 2015
2014 2015 2014 U.S. Packaging
operating profit $ 93.5 $ 87.7 $ 391.8 $ 375.8 Global
Packaging: Operating profit before restructuring and
acquisition-related costs 28.1 29.7 116.5 113.3 Restructuring and
acquisition-related costs (2.2 ) — (9.4 ) — Operating
profit 25.9 29.7 107.1 113.3 General corporate expenses
(22.2 ) (18.9 ) (89.3 ) (81.4 )
Operating income 97.2
98.5 409.6 407.7 Interest expense 13.2 12.9 51.7 60.8
Other non-operating income (1.2 ) (1.2 ) (6.0 ) (16.8 )
Income from continuing operations before income taxes $ 85.2
$ 86.8 $ 363.9 $ 363.7
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions, except per share
amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, 2015
2014 2015 2014 U.S.
Packaging Net sales $ 655.6 $ 680.0 $ 2,747.5
$ 2,860.7 Operating profit as reported $ 93.5
$ 87.7 $ 391.8 $ 375.8 Operating
profit return on sales As reported 14.3 % 12.9 % 14.3 % 13.1 %
Global Packaging Net sales $ 327.1 $ 372.7
$ 1,323.9 $ 1,482.8 Operating profit as
reported $ 25.9 $ 29.7 $ 107.1 $ 113.3 Non-GAAP adjustments:
Restructuring costs (1) 1.1 — 7.8 — Acquisition-related costs (2)
1.1 — 1.6 — Operating profit as
adjusted $ 28.1 $ 29.7 $ 116.5 $ 113.3
Operating profit return on sales As reported 7.9 % 8.0 % 8.1
% 7.6 % As adjusted 8.6 % 8.0 % 8.8 % 7.6 % (1)
Includes costs related to the plant closure in Philadelphia,
Pennsylvania (a healthcare packaging manufacturing facility). (2)
Acquisition-related costs are comprised of acquisition costs
associated with the Emplal Participacoes S.A. acquisition.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP EARNINGS PER SHARE
(unaudited)
Three Months Ended Twelve Months Ended December
31, December 31, 2015 2014
2015 2014 Continuing Operations
Diluted earnings per share, as reported $ 0.58 $ 0.57 $ 2.47 $ 2.36
Non-GAAP adjustments per share, net of taxes: Gain on
divestiture (1) — — — (0.06 ) Restructuring costs (2) 0.01 — 0.05 —
Acquisition-related costs (3) 0.01 — 0.03 —
Diluted earnings per share, as adjusted $ 0.60
$ 0.57 $ 2.55 $ 2.30 (1) Gain on
divestiture relates to the sale of the Paper Packaging Division.
(2) Includes costs related to the plant closure in Philadelphia,
Pennsylvania (a healthcare packaging manufacturing facility). (3)
Acquisition-related costs are comprised of acquisition costs
associated with the Emplal Participacoes S. A. acquisition and
charges related to contingent liabilities associated with a prior
acquisition.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP RETURN ON INVESTED CAPITAL
(in millions)
(unaudited)
Quarter
Ended
12 months endedDecember
31,2015
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
Income from Continuing
Operations
Operating income (EBIT) $ 97.2 $ 105.8 $ 109.2 $ 97.4 $ 409.6
Restructuring and acquisition-related costs 2.2 4.6
0.3 5.0 12.1
Adjusted EBIT (Continuing
Operations) 99.4 110.4 109.5 102.4 421.7
Loss from
Discontinued Operations — — — (2.6 ) (2.6 ) Income taxes —
— — (1.1 ) (1.1 )
Discontinued Operations
EBIT — — — (3.7 ) (3.7 ) Discontinued operations impairment and
plant closure — — — 3.7 3.7
Adjusted EBIT (Discontinued Operations) — — — — —
Adjusted EBIT (Bemis Company Inc.)
(a) $ 99.4 $ 110.4 $ 109.5 $ 102.4
$ 421.7
Average Invested Capital1
(b) 2,603.8
Assumed tax rate2 (c) 35.0
%
Adjusted ROIC (a * (1 - c) / b) 10.5 %
Quarter Ended
12 months endedDecember
31,2014
December 31, 2014 September 30,
2014 June 30, 2014
March 31, 2014 Income from Continuing
Operations (EBIT) $ 98.5 $ 107.3 $ 106.6 $ 95.3 $ 407.7
Income (Loss) from Discontinued Operations 1.9 (44.5 ) 5.1
(10.5 ) (48.0 ) Income taxes 0.8 9.6 4.0 (5.8 ) 8.6 Other
non-operating income — 0.1 0.1 — 0.2
Discontinued Operations EBIT 2.7 (34.8 ) 9.2 (16.3 )
(39.2 ) Discontinued operations impairment and plant closure —
43.9 — 25.0 68.9
Adjusted
EBIT (Discontinued Operations) 2.7 9.1 9.2 8.7 29.7
Adjusted EBIT (Bemis Company Inc.)
(a) $ 101.2 $ 116.4 $ 115.8 $ 104.0
$ 437.4
Average Invested Capital1
(b) 2,928.9
Assumed tax rate2 (c) 35.0
%
Adjusted ROIC (a * (1 - c) / b) 9.7 % 1 - Average invested
capital includes all equity and debt amounts, less cash calculated
on a five-quarter average. 2 - Tax rate assumed to be the U.S.
federal statutory rate.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160128005432/en/
Bemis Company Inc.Erin M. Winters,
920-527-5288Director of Investor Relations
Bemis (NYSE:BMS)
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