SUMMARY:
- Third quarter adjusted diluted earnings
per share were $0.75 in 2016, compared to $0.67 the prior third
quarter, an increase of 11.9 percent. On a GAAP basis: $0.72 in
2016 compared to $0.64 in 2015, an increase of 12.5 percent.
- Adjusted EBITDA increased to $160.7
million, compared to $148.4 million the prior third quarter. On a
GAAP basis: Net Income was $68.6 million in the third quarter of
2016, compared to $62.5 million the prior year.
- U.S. Packaging segment operating profit
return on sales increased to 15.3 percent, compared to 14.5 percent
in the prior third quarter.
- Global Packaging segment adjusted
operating profit return on sales increased to 9.8 percent, compared
to 9.7 percent in the prior third quarter. On a GAAP basis: 8.6
percent compared to 9.1 percent in the prior third quarter.
- Adjusted return on invested capital was
10.6 percent at September 30, 2016, compared to 10.3 percent
at September 30, 2015. See attached reconciliation.
- Cash flow from operations for the third
quarter was $195.4 million, reflecting sequential progress, in line
with the company’s expectations. Year-to-date cash flow from
operations totaled $348.4 million.
- Bemis repurchased 1.0 million shares of
its common stock for $51.1 million.
- Management updated full year adjusted
EPS guidance to be in the range of $2.65 to $2.70. On a GAAP basis:
$2.44 to $2.49, which primarily considers expected restructuring
charges during the balance of the year.
Bemis Company, Inc. (NYSE:BMS) today reported third quarter 2016
diluted earnings per share from continuing operations of $0.72.
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 $0.75 in 2016 and $0.67 in
2015, an increase of 11.9 percent. The net impact of currency
translation on earnings was nominal, as compared to the prior third
quarter.
“Our key financial metrics improved this quarter,” said William
F. Austen, Bemis Company's President and Chief Executive Officer.
“Adjusted EPS increased nearly 12 percent over the prior year. We
increased operating margins and delivered our highest total company
EBITDA since 2014. Cash from operations improved sequentially, in
line with our plan.” Austen continued, “We still have room for
improvement. In our U.S. business, we planned for volume growth but
disappointed ourselves with flat unit volumes this quarter. In our
Global business, we continue to work on improving operational
efficiencies at our expanded Oshkosh healthcare packaging facility
and on executing our restructuring program in Latin America.”
Austen further commented, “I remain confident in the long-term
health of our business and remain committed to creating long-term
shareholder value.”
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $657.6 million for the third quarter
of 2016 represented a decrease of 4.7 percent compared to the same
period of 2015. Unit volumes were approximately the same as the
prior third quarter. The decrease in net sales was driven by mix of
products sold and the contractual pass through of lower raw
material costs.
U.S. Packaging operating profit increased to $100.8 million in
the third quarter of 2016, or 15.3 percent of net sales, compared
to $100.0 million, or 14.5 percent of net sales, in 2015. This
margin increase primarily reflects operational improvements
attributable to manufacturing efficiencies from the Company’s asset
recapitalization program.
Global Packaging
Global Packaging net sales for the third quarter of 2016 of
$369.6 million represent an increase of 12.6 percent compared to
the same period of 2015. Currency translation reduced net sales by
6.0 percent. Acquisitions increased net sales by 9.9 percent.
Excluding the impact of currency translation and acquisitions, net
sales increased by 8.7 percent, reflecting increased sales price
and mix. Unit volumes were approximately the same as the prior
third quarter.
Global Packaging operating profit for the third quarter was
$31.8 million, compared to $29.9 million for the same period in
2015. Excluding restructuring and acquisition-related costs,
segment adjusted operating profit would have been $36.2 million, or
9.8 percent of net sales, which compares to 9.7 percent of net
sales in 2015. (See attached schedule: “Reconciliation of Non-GAAP
Operating Profit.”) The net impact of currency translation on
operating profit was nominal, as compared to the prior third
quarter. Operating profit during the quarter reflects the impact of
positive sales price and mix, partially offset by continued
operational inefficiencies at one of the Company's healthcare
packaging facilities.
CASH FLOW AND CAPITAL STRUCTURE
Cash flow from operations for the nine months ended
September 30, 2016 was $348.4 million, compared to $412.0
million in the prior year. Prior year cash flow reflects the
initial benefits of programs implemented to drive improvements in
working capital.
Total company net debt to adjusted EBITDA was 2.4 times at
September 30, 2016. 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.
On September 15, 2016, the Company issued $300 million of notes
due in 2026 with a fixed interest rate of 3.1%, the proceeds of
which were used to repay outstanding commercial paper and for
general corporate purposes.
Capital expenditures totaled $129.0 million for the nine months
ended September 30, 2016, reflecting continued investment in
new capacity to support growth initiatives and productivity
improvements.
During the third quarter, Bemis repurchased 1.0 million shares,
for $51.1 million. At September 30, 2016, the remaining Board
authorization for the repurchase of Bemis common stock was 21.4
million shares.
OUTLOOK
Management updated full year 2016 adjusted earnings per share to
be in the range of $2.65 to $2.70. This guidance range reflects
management’s updated expectations of sales volumes in its U.S.
Packaging business.
Management continues to expect cash from operations to be in the
range of $425 to $465 million and capital expenditures to be
approximately $200 million for the full year 2016.
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, adjusted EBITDA, 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 restructuring, 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 and changes
in the 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). Management of the
Company uses the non-GAAP measures to evaluate operating
performance and believes that these non-GAAP measures are useful to
enable investors to perform comparisons of current and historical
performance of the Company.
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 and global
economic conditions caused by inflation, interest rates, consumer
confidence, rates of unemployment and foreign currency exchange
rates; investment performance of assets in our pension plans;
competitive conditions within our markets, including the acceptance
of our new and existing products; potential loss of business or
increased costs due to customer or vendor consolidation; customer
contract bidding activity; threats or challenges to our patented or
proprietary technologies; raw materials: cost availability, and
terms (particularly for polymer resins and adhesives); price
changes for raw materials and our ability to pass these price
changes to our customers or otherwise manage commodity price
fluctuation risks; unexpected energy surcharges; broad changes in
customer order patterns; a failure in our information technology
infrastructure or applications; changes in governmental regulation,
especially in the areas of environmental, health and safety
matters, fiscal incentives and foreign investment; unexpected
outcomes in our current and future administrative and litigation
proceedings; unexpected outcomes in our current and future tax
proceedings; changes in domestic and international tax laws; costs
associated with the pursuit of business combinations or
divestitures; unexpected costs associated with the integration of
acquired businesses; unexpected costs and timing related to
transition of production; changes in our labor relations; and the
impact of changes in the world political environment including
threatened or actual armed conflict. 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, 2015.
INVESTOR CONFERENCE CALL
Bemis Company, Inc. will webcast an investor telephone
conference regarding its third quarter 2016 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 18,000 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 EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015 Net
sales $ 1,027.2 $ 1,018.3 $ 3,016.4 $ 3,088.7 Cost of products sold
802.4 796.5 2,365.8 2,428.2 Gross
profit 224.8 221.8 650.6 660.5 Operating expenses: Selling,
general and administrative expenses 95.8 101.8 295.6 312.1 Research
and development 11.6 11.0 34.7 33.8 Restructuring and
acquisition-related costs 4.4 4.6 24.8 9.9 Other operating income
(3.2 ) (1.4 ) (9.1 ) (7.7 ) Operating income 116.2 105.8
304.6 312.4 Interest expense 15.1 12.6 44.5 38.5 Other
non-operating income (0.6 ) (0.8 ) (1.1 ) (4.8 ) Income from
continuing operations before income taxes 101.7 94.0 261.2 278.7
Provision for income taxes 33.1 31.5 85.5
93.6 Income from continuing operations 68.6
62.5 175.7 185.1 Loss from discontinued operations —
— — (2.6 ) Net income $ 68.6 $ 62.5
$ 175.7 $ 182.5
Basic earnings per
share: Income from continuing operations $ 0.73 $ 0.65 $ 1.86 $
1.91 Loss from discontinued operations — — —
(0.03 ) Net income $ 0.73 $ 0.65 $ 1.86 $ 1.88
Diluted earnings per share: Income from
continuing operations $ 0.72 $ 0.64 $ 1.84 $ 1.89 Loss from
discontinued operations — — — (0.03 ) Net
income $ 0.72 $ 0.64 $ 1.84 $ 1.86
Cash dividends paid per share $ 0.29 $ 0.28 $
0.87 $ 0.84 Weighted average shares
outstanding (including participating securities): Basic 94.3 96.4
94.6 97.0 Diluted 95.0 97.7 95.5 98.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions) (unaudited)
September 30, 2016
December 31,2015
ASSETS
Cash and cash equivalents $ 79.1 $ 59.2 Trade receivables
474.7 451.3 Inventories 568.6 525.9 Prepaid expenses and other
current assets 76.6 82.6 Total current assets 1,199.0
1,119.0 Property and equipment, net 1,268.9
1,206.3 Goodwill 1,037.2 949.5 Other
intangible assets, net 161.6 149.8 Deferred charges and other
assets 86.4 65.2 Total other long-term assets 1,285.2
1,164.5
TOTAL ASSETS $ 3,753.1 $
3,489.8
LIABILITIES
Current portion of long-term debt $ 1.5 $ 5.8 Short-term
borrowings 15.9 29.6 Accounts payable 422.6 334.8 Employee-related
liabilities 77.3 93.3 Accrued income and other taxes 41.5 35.2
Other current liabilities 66.1 90.4 Total current
liabilities 624.9 589.1 Long-term debt, less
current portion 1,485.9 1,353.9 Deferred taxes 198.6 172.4 Other
liabilities and deferred credits 160.7 167.0
TOTAL LIABILITIES 2,470.1 2,282.4
EQUITY
Common stock issued (128.8 and 128.2 shares, respectively)
12.9 12.8 Capital in excess of par value 576.8 573.2 Retained
earnings 2,308.5 2,216.0 Accumulated other comprehensive loss
(435.1 ) (509.9 ) Common stock held in treasury (35.1 and 33.1
shares at cost, respectively) (1,180.1 ) (1,084.7 )
TOTAL
EQUITY 1,283.0 1,207.4
TOTAL
LIABILITIES AND EQUITY $ 3,753.1 $ 3,489.8
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions) (unaudited)
Nine Months Ended September 30,
2016 2015
Cash flows from
operating activities
Net income $ 175.7 $ 182.5 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 121.4 118.1 Excess tax benefit from share-based
payment arrangements (4.4 ) (0.3 ) Share-based compensation 13.9
13.7 Deferred income taxes 17.0 (5.0 ) Income of unconsolidated
affiliated company (1.7 ) (1.5 ) Non-cash impairment charge of
discontinued operations — 3.2 Loss (gain) on sale of property and
equipment 1.7 (3.0 ) Changes in working capital, excluding effect
of acquisitions, divestitures and currency 15.4 94.6 Changes in
other assets and liabilities 9.4 9.7 Net cash
provided by operating activities 348.4 412.0
Cash flows from
investing activities
Additions to property and equipment (129.0 ) (147.9 ) Business
acquisitions and adjustments, net of cash acquired (114.5 ) —
Proceeds from sale of property and equipment 7.3 9.4 Proceeds from
divestitures — 13.6 Net cash used in investing
activities (236.2 ) (124.9 )
Cash flows from
financing activities
Proceeds from issuance of long-term debt 297.1 2.0 Repayment of
long-term debt (23.9 ) — Net repayment of commercial paper (165.8 )
(31.8 ) Net repayment of short-term debt (8.1 ) (20.0 ) Cash
dividends paid to shareholders (86.9 ) (82.2 ) Common stock
purchased for the treasury (95.4 ) (104.3 ) Deferred payments for
business acquisitions — (4.3 ) Excess tax benefit from share-based
payment arrangements 4.4 0.3 Stock incentive programs and related
tax withholdings (14.6 ) (2.7 ) Net cash used in financing
activities (93.2 ) (243.0 ) Effect of exchange rates on cash
and cash equivalents 0.9 (12.6 ) Net increase in cash
and cash equivalents 19.9 31.5 Cash and cash equivalents
balance at beginning of year 59.2 47.1 Cash
and cash equivalents balance at end of period $ 79.1 $ 78.6
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions) (unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015
U.S. Packaging operating profit $ 100.8 $ 100.0 $ 306.0 $
298.3
Global Packaging: Operating profit before
restructuring and acquisition-related costs 36.2 31.8 80.6 88.4
Restructuring and acquisition-related costs (4.4 ) (1.9 ) (24.6 )
(7.2 ) Operating profit 31.8 29.9 56.0 81.2 General
corporate expenses (16.4 ) (24.1 ) (57.4 ) (67.1 )
Operating income 116.2 105.8 304.6 312.4 Interest
expense 15.1 12.6 44.5 38.5 Other non-operating income (0.6
) (0.8 ) (1.1 ) (4.8 )
Income from continuing operations
before income taxes $ 101.7 $ 94.0 $ 261.2
$ 278.7
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions) (unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015
U.S. Packaging Net sales $ 657.6 $ 690.2 $
1,989.1 $ 2,091.9 Operating profit as reported
$ 100.8 $ 100.0 $ 306.0 $ 298.3
Operating profit return on sales As reported 15.3 % 14.5 % 15.4 %
14.3 %
Global Packaging Net sales $ 369.6 $
328.1 $ 1,027.3 $ 996.8 Operating
profit as reported $ 31.8 $ 29.9 $ 56.0 $ 81.2 Non-GAAP
adjustments: Restructuring costs (1) 4.3 1.4 17.6 6.7
Acquisition-related costs (2) 0.1 0.5 7.0 0.5
Operating profit as adjusted $ 36.2 $ 31.8
$ 80.6 $ 88.4 Operating profit return
on sales As reported 8.6 % 9.1 % 5.5 % 8.1 % As adjusted 9.8 % 9.7
% 7.8 % 8.9 % (1) In 2016, includes costs primarily related
to plant closures in Latin America. In 2015, 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
Participações S.A. and SteriPack acquisitions.
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP EARNINGS PER SHARE
(unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015
Continuing Operations Diluted earnings per share, as
reported $ 0.72 $ 0.64 $ 1.84 $ 1.89 Non-GAAP adjustments
per share, net of taxes: Restructuring costs (1) 0.03 0.01 0.12
0.04 Acquisition-related costs (2) — 0.02 0.06
0.02 Diluted earnings per share, as adjusted $ 0.75 $
0.67 $ 2.02 $ 1.95 (1) In 2016, includes costs
primarily related to plant closures in Latin America. In 2015,
includes costs related to the plant closure in Philadelphia,
Pennsylvania (a healthcare packaging manufacturing facility). (2)
Acquisition-related costs are comprised primarily of acquisition
costs associated with the Emplal Participações S. A. and SteriPack
acquisitions and were recorded both in operating income and
interest expense (reflecting fees to extinguish portions of the
Emplal seller's debt).
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP RETURN ON INVESTED CAPITAL AND EBITDA
(in millions) (unaudited)
Quarter Ended
12 months endedSeptember
30,2016
September 30, 2016
June 30, 2016 March 31,
2016 December 31, 2015 Net
income $ 68.6 $ 50.9 $ 56.2 $ 56.8 $ 232.5 Income taxes 33.1
24.7 27.7 28.4 113.9 Interest expense 15.1 14.0 15.4 13.2 57.7
Other non-operating (income) expense (0.6 ) (0.6 ) 0.1 (1.2
) (2.3 )
Earnings before interest and taxes (EBIT) 116.2
89.0 99.4 97.2 401.8 Restructuring and acquisition-related costs
4.4 19.6 0.8 2.2 27.0
Adjusted EBIT (a) 120.6 108.6 100.2 99.4 428.8 Depreciation
and amortization 40.1 40.5 40.8 40.0
161.4
Adjusted EBITDA $ 160.7 $ 149.1 $
141.0 $ 139.4 $ 590.2
Average
Invested Capital1 (b) 2,627.6
Assumed tax
rate2 (c) 35.0 %
Adjusted ROIC (a * (1 - c) /
b) 10.6 %
Quarter Ended
12 months endedSeptember
30,2015
September 30, 2015
June 30, 2015
March 31,20153
December 31,20143
Net income $ 62.5 $ 65.6 $ 54.4 $ 59.1 $ 241.6 Income taxes
31.5 33.0 28.0 30.4 122.9 Interest expense 12.6 12.8 13.1 12.9 51.4
Other non-operating income (0.8 ) (2.2 ) (1.8 ) (1.2 ) (6.0 )
Earnings before interest and taxes (EBIT) 105.8 109.2 93.7
101.2 $ 409.9 Restructuring and acquisition-related costs 4.6 0.3
5.0 — 9.9 Discontinued operations impairment and plant closure —
— 3.7 — 3.7
Adjusted EBIT
(a) 110.4 109.5 102.4 101.2 423.5 Depreciation and amortization
38.0 40.4 39.7 41.6 159.7
Adjusted EBITDA $ 148.4 $ 149.9 $ 142.1
$ 142.8 $ 583.2
Average Invested
Capital1 (b) 2,679.4
Assumed tax
rate2 (c) 35.0 %
Adjusted ROIC (a * (1 - c) /
b) 10.3 % 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. 3 -
Includes amounts related to both continuing and discontinued
operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027005565/en/
Bemis Company Inc.Erin M. Winters, 920-527-5288Director of
Investor Relations
Bemis (NYSE:BMS)
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