Berry Global Group, Inc. (NYSE:BERY) today reported results for
its third fiscal 2017 quarter, referred to in the following as the
June 2017 quarter.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20170803005287/en/
- Net income for the June 2017 quarter
was $107 million ($0.79 per diluted share) compared to $96 million
($0.76 per diluted share) in the prior year quarter. Adjusted net
income per diluted share in the June 2017 quarter was 13 percent
higher at $0.93 compared to $0.82 in the prior year quarter.
- Net sales increased 16 percent over the
prior year quarter and was a quarterly record at $1 billion 906
million. Operating income for the quarter increased by 18 percent
to a quarterly record of $212 million compared to $179 million in
the prior year quarter. Operating EBITDA was also a quarterly
record at $364 million (19.1 percent of net sales), an increase of
15 percent compared to the June 2016 quarter.
- Cash flow from operations for the last
four quarters ended June 2017 was $870 million, and adjusted free
cash flow for the same period was $554 million.
- We are reaffirming our fiscal 2017
guidance of projected cash flow from operations of $925 million and
adjusted free cash flow of $550 million.
- Increased our annual cost synergies for
the AEP acquisition again from our initial guidance of $50 million
to $80 million
“This continues to be an exciting year for Berry as we celebrate
our 50th year in business while also achieving a milestone in the
quarter with our placement into the Fortune 500. We achieved
quarterly records for net sales and operating EBITDA and continued
our work integrating the AEP acquisition. Adjusted free cash flow
improved 20 percent, and adjusted net income per diluted share was
also 13% higher at 93 cents,” said Tom Salmon, CEO of Berry.
June 2017 Quarter
Results
Comparison of the Quarterly Period Ended July 1, 2017 (“Current
Quarter”) and the Quarterly Period Ended July 2, 2016 (“Prior Year
Quarter”) are presented below:
Consolidated Overview
(in millions of dollars)
Current
Prior Year
Quarter Quarter
$ Change
% Change Net sales
$
1,906 $ 1,645 $ 261 16 % Operating income
212 179 33
18 %
The net sales increase of $261 million from the prior year
quarter is primarily attributed to acquisition net sales of $295
million and selling price increases of $49 million due to the pass
through of higher resin prices, partially offset by a negative $76
million impact from base volume declines and a $8 million negative
impact from foreign currency changes.
The operating income increase of $33 million from the prior year
quarter is primarily attributed to acquisition operating income of
$22 million, a $14 million decrease in selling, general and
administrative expense, and a $11 million improvement in our
product mix and price/cost spread, and a decrease in business
integration expenses. These improvements were partially offset by a
$5 million increase in depreciation and amortization expense and a
negative $12 million impact from base volume declines.
The performance of the Company’s divisions compared with the
prior year quarter is as follows:
Engineered Materials
(in millions of dollars)
Current
Prior Year
Quarter Quarter
$ Change
% Change Net sales
$ 686
$ 408 $ 278 68 % Operating income
99 52 47 90 %
Engineered Materials’ net sales increased by $278 million
from prior year quarter primarily attributed to acquisition net
sales of $295 million and selling price increases of $32 million
due to the pass through of higher resin prices, partially offset by
a negative $49 million impact from base volume declines. We believe
the volume decline is partially attributed to inventory reductions
by our customers in anticipation of lower future resin costs as
well as our decisions between volume and price in order to maximize
earnings.
The operating income increase of $47 million from prior year
quarter is primarily attributed to acquisition operating income of
$22 million, a $25 million improvement in our product mix and
price/cost spread, and a $5 million reduction in selling, general
and administrative expenses, partially offset by a negative $7
million impact from the base volume decline.
Health, Hygiene, and Specialties
(in millions of dollars)
Current
Prior Year
Quarter Quarter
$ Change
% Change Net sales
$ 606
$ 606 $ — — % Operating income
53 69 (16 ) (23 )%
Health, Hygiene, and Specialties’ net sales were flat
compared to the prior year quarter attributed to selling price
increases of $8 million due to the pass through of higher resin
prices partially offset by a $7 million unfavorable impact from
currency translation.
The operating income decrease of $16 million from the prior year
quarter is primarily attributed to a $15 million decrease in
price/cost spread and an $8 million increase in depreciation and
amortization expense as a result of Avintiv purchase accounting
adjustments recorded in the prior year quarter, partially offset by
a $4 million decrease in selling, general, and administrative
expenses and a slight improvement in productivity in
manufacturing.
Consumer Packaging
(in millions of dollars)
Current
Prior Year
Quarter Quarter
$ Change
% Change Net sales
$ 614
$ 631 $ (17 ) (3 )% Operating income
60 58 2 3 %
Consumer Packaging’s net sales decreased by $17 million
from prior year quarter primarily attributed to a negative $25
million impact from base volume declines primarily attributed to
general market softness. The decrease is partially offset by an $8
million selling price increase due to the pass through of higher
resin prices.
The operating income increase of $2 million from prior year
quarter was primarily attributed to a $5 million decrease in
selling, general and administrative expenses and a $5 million
decrease in depreciation and amortization expense. These
improvements are partially offset by a negative $5 million impact
from base volume declines and a slight impact from negative
productivity in manufacturing.
Cash Flow and Capital
Structure
Our cash from operating activities was $247 million for the June
2017 quarter and $870 million for the last four quarters ended June
2017. The Company’s adjusted free cash flow was $181 million, a 20
percent increase compared to the prior year quarter of $151 million
and $554 million for the last four quarters ended June 2017.
Our total debt less cash and cash equivalents at the end of the
June 2017 quarter was $5,616 million. Adjusted EBITDA for the four
quarters ended July 1, 2017 was $1,402 million.
Outlook
“Today, we are reaffirming our fiscal year 2017 projected cash
flow from operations of $925 million and adjusted free cash flow of
$550 million which includes the $925 million of cash flow from
operations partially offset by net capital expenditures of $265
million as well as $110 million of payments under the tax
receivable agreement (“TRA”). The $110 million of payments related
to the TRA includes $60 million that was made in the first fiscal
quarter and an anticipated $50 million payment to be made at the
end of the September 2017 quarter.
Looking ahead, we will continue our focus on reducing our
leverage ratio to a goal of below 4, on or before the end of fiscal
2017. Additionally, we remain excited about our recent acquisition
of AEP, and the results to date have validated our expectations of
the synergy potential and scale advantages through the combined
businesses. Based on our progress to date, we are increasing our
annual cost synergy target for the AEP acquisition from our initial
$50 million and revised $70 million to now, $80 million,” stated
Salmon.
Investor Conference Call
The Company will host a conference call today, August 3, 2017,
at 10 a.m. Eastern Time to discuss its third quarter fiscal 2017
results. The telephone number to access the conference call is
(800) 305-1078 (domestic), or (703) 639-1173 (international),
conference ID 53862139. We expect the call to last approximately
one hour. Interested parties are invited to listen to a live
webcast and view the accompanying
slides by visiting the Company’s Investor page at
www.berryglobal.com. A replay of the conference call can also be
accessed on the Investor page of the website beginning August 3,
2017, at 1 p.m. Eastern Time, to August 10, 2017, by calling (855)
859-2056 (domestic), or (404) 537-3406 (international), access code
53862139.
About Berry
Berry is committed to its mission of ‘Always Advancing to
Protect What’s Important,’ and proudly partners with its customers
to provide them with value-added customized protection solutions.
The Company’s products include engineered materials, non-woven
specialty materials, and consumer packaging. Berry’s world
headquarters is located in Evansville, Indiana. With net sales of
$6.5 billion in fiscal 2016, Berry, a Fortune 500 company, is
listed on the New York Stock Exchange under the ticker symbol BERY.
For additional information, visit the Berry’s website at
www.berryglobal.com.
Non-GAAP Financial
Measures
This press release includes non-GAAP financial measures such as
operating EBITDA, adjusted EBITDA, adjusted net income, and
adjusted free cash flow. A reconciliation of these non-GAAP
financial measures to comparable measures determined in accordance
with accounting principles generally accepted in the United States
of America (GAAP) is set forth at the end of this press release.
Our “leverage ratio” means the ratio of (i) our total debt minus
our cash and cash equivalents to (ii) our Adjusted EBITDA.
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 Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements because they contain words such as “believes,”
“expects,” “may,” “will,” “should,” “would,” “could,” “seeks,”
“approximately,” “intends,” “plans,” “estimates,” “anticipates”
“outlook,” or “looking forward,” or similar expressions that relate
to our strategy, plans or intentions. All statements we make
relating to our estimated and projected earnings, margins, costs,
expenditures, cash flows, growth rates and financial results or to
our expectations regarding future industry trends are
forward-looking statements. In addition, we, through our senior
management team, from time to time make forward-looking public
statements concerning our expected future operations and
performance and other developments. These forward-looking
statements are subject to risks and uncertainties that may change
at any time, and, therefore, our actual results may differ
materially from those that we expected.
Important factors that could cause actual results to differ
materially from our expectations, which we refer to as cautionary
statements, are disclosed under “Risk Factors” and elsewhere in our
Annual Report on Form 10-K and subsequent filings with the
Securities and Exchange Commission, including, without limitation,
in conjunction with the forward-looking statements included in this
release. All forward-looking information and subsequent written and
oral forward-looking statements attributable to us, or to persons
acting on our behalf, are expressly qualified in their entirety by
the cautionary statements. Some of the factors that we believe
could affect our results include: (1) risks associated with our
substantial indebtedness and debt service; (2) changes in prices
and availability of resin and other raw materials and our ability
to pass on changes in raw material prices on a timely basis; (3)
the impact of potential changes in interest rates: (4) performance
of our business and future operating results; (5) risks related to
our acquisition strategy and integration of acquired businesses;
(6) reliance on unpatented know-how and trade secrets; (7)
increases in the cost of compliance with laws and regulations,
including environmental, safety, and production and product laws
and regulations; (8) risks related to disruptions in the overall
economy and the financial markets may adversely impact our
business; (9) catastrophic loss of one of our key manufacturing
facilities, natural disasters, and other unplanned business
interruptions; (10) risks of competition, including foreign
competition, in our existing and future markets;(11) general
business and economic conditions, particularly an economic
downturn; (12) potential failure to realize the intended benefits
from recent acquisitions, including the inability to realize the
anticipated cost synergies in the anticipated amounts or within the
contemplated timeframes or cost expectations; (13) risks related to
international business, including foreign currency exchange rate
risk and the risks of compliance with applicable export controls,
sanctions, anti-corruption laws and regulations and (14) the other
factors discussed in the under the heading “Risk Factors” in our
Annual Report on Form 10-K and subsequent filings with the
Securities and Exchange Commission. We caution you that the
foregoing list of important factors may not contain all of the
material factors that are important to you. Accordingly, readers
should not place undue reliance on those statements. All
forward-looking statements are based upon information available to
us on the date of this release. We undertake no obligation to
publicly update or revise any forward-looking statement as a result
of new information, future events or otherwise, except as otherwise
required by law.
Berry Global Group, Inc. Consolidated
Statements of Income
(Unaudited)
(in millions of dollars, except per share
data amounts)
Quarterly Period Ended Three Quarterly Periods
Ended
July 1, 2017
July 2, 2016
July 1, 2017 July 2, 2016
Net sales
$ 1,906 $ 1,645
$
5,214 $ 4,871 Costs and expenses: Cost of goods sold
1,518 1,296
4,177 3,885 Selling, general and
administrative
128 129
373 421 Amortization of
intangibles
40 35
113 106 Restructuring and
impairment charges
8 6
18 29 Operating income
212 179
533 430 Other (income) expense, net
(1
) (14 )
18 (17 ) Interest expense, net
68 73
203 222
Income before income taxes
145 120
312 225
Income tax expense
38 24
82 66 Consolidated net income
$
107 $ 96
$ 230 $ 159
Net income per share: Basic
$ 0.82 $ 0.79
$ 1.82 $ 1.32 Diluted
0.79 0.76
1.75
1.28 Outstanding weighted-average shares: (in millions)
Basic
129.9 121.1
126.6 120.5 Diluted
135.2
125.9
131.4 123.9
Berry Global Group,
Inc. Consolidated Statements of Comprehensive Income
(Unaudited)
(in millions of dollars)
Quarterly Period Ended Three Quarterly Periods
Ended July 1, 2017 July 2, 2016
July 1,
2017 July 2, 2016 Consolidated net income
$
107 $ 96
$ 230 $ 159 Currency translation
24 (16 )
4 39 Defined benefit pension and retiree
health benefit plans
— —
13 — Interest rate hedges
(1 ) (4 )
23 (20 ) Provision for income taxes
related to other comprehensive income items
—
1
(8 ) 8 Other
comprehensive income, net of tax
23 (19
)
32 27 Comprehensive income
$ 130 $ 77
$ 262 $
186
Berry Global Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions of dollars)
July 1, 2017 October 1, 2016
Assets: Cash and
cash equivalents
$ 275 $ 323 Accounts receivable, net
844 704 Inventories
811 660 Other current assets
92 105 Property, plant, and equipment, net
2,375
2,224 Goodwill, intangible assets, and other long-term assets
4,148 3,637 Total assets
$ 8,545 $ 7,653
Liabilities
and stockholders' equity: Current liabilities, excluding debt
$ 1,079 $ 988 Current and long-term debt
5,891
5,755 Other long-term liabilities
727 689 Stockholders’
equity
848 221 Total liabilities
and stockholders' equity
$ 8,545 $ 7,653
Current and Long-Term Debt
July 1, 2017
October 1, 2016 (in millions of dollars) Revolving
line of credit
$ 50 $ — Term loans
4,156 4,060
5.5% Second priority notes
500 500 6.0% Second priority
notes
400 400 5.125% Second priority notes
700 700
Debt discounts and deferred fees
(52 ) (58 ) Capital
leases and other
137 153 Total
debt
$ 5,891 $ 5,755
Berry
Global Group, Inc. Condensed Consolidated Statements of Cash
Flows
(Unaudited)
(in millions of dollars)
Three Quarterly Periods Ended July 1, 2017
July 2, 2016
Cash flows from operating
activities: Consolidated net income
$ 230 $ 159
Depreciation
270 284 Amortization of intangibles
113
106 Other non-cash items
87 40 Other assets and liabilities
(7 ) 4 Working capital
(113 )
(26 ) Net cash from operating activities
580 567
Cash flows from investing activities: Additions to
property, plant, and equipment
(201 ) (228 ) Proceeds
from sale of assets
4 4 Other investing activities, net
(1 ) (11 ) Acquisitions of businesses, net of cash
acquired
(515 ) (2,283 ) Net cash from
investing activities
(713 ) (2,518 )
Cash
flows from financing activities: Proceeds from long-term
borrowings
545 2,490 Repayment of long-term borrowings
(427 ) (390 ) Proceeds from issuance of common stock
26 20 Debt financing costs
(4 ) (38 ) Payment
of tax receivable agreement
(60 ) (57 ) Purchase of
non-controlling interest
— (66 ) Net
cash from financing activities
80 1,959
Effect of exchange rate changes on cash
5 — Net
change in cash and cash equivalents
(48 ) 8 Cash and
cash equivalents at beginning of period
323
228 Cash and cash equivalents at end of period
$ 275 $ 236
Berry Global
Group, Inc. Condensed Consolidated Financial Statements
Segment Information
(Unaudited)
(in millions of dollars)
Quarterly Period Ended July 1, 2017
Consumer
Health, Hygiene & Engineered
Packaging Specialties Materials Total
Net sales
$ 614 $ 606 $
686 $ 1,906 Operating income
$
60 $ 53 $ 99 $ 212
Depreciation and amortization
56 46 30
132 Restructuring and impairment charges
2 4
2 8 Other non-cash charges (1)
3 3
1 7 Business optimization costs (2)
—
5 — 5 Operating EBITDA
$ 121 $ 111 $ 132
$ 364 Quarterly Period Ended July 2, 2016
Consumer Health,
Hygiene & Engineered Packaging Specialties Materials Total Net
sales $ 631 $ 606 $ 408 $ 1,645 Operating income $ 58 $ 69 $
52 $ 179 Depreciation and amortization 61 38 21 120 Restructuring
and impairment charges 2 4 — 6 Other non-cash charges (1) 3 3 1 7
Business optimization costs (2) — 4 — 4
Operating EBITDA $ 124 $ 118 $ 74 $ 316 (1) Other non-cash
charges in the June 2017 quarter primarily includes $5 million of
stock compensation expense. Other non-cash charges in the June 2016
quarter primarily includes $3 million of stock compensation
expense, $3 million step up of inventory to fair value related to
the Avintiv acquisition, along with other non-cash charges. (2)
Includes integration expenses and other business optimization
costs.
Berry Global Group, Inc. Condensed
Consolidated Financial Statements Segment Information
(Unaudited)
(in millions of dollars)
Three Quarterly Periods Ended July 1, 2017
Consumer
Health, Hygiene & Engineered
Packaging Specialties Materials Total
Net sales
$ 1,752 $ 1,773 $
1,689 $ 5,214 Operating income
$
150 $ 164 $ 219 $
533 Depreciation and amortization
174 136
73 383 Restructuring and impairment charges
6
8 4 18 Other non-cash charges (1)
8
10 10 28 Business optimization costs (2)
— 10 5 15
Operating EBITDA
$ 338 $ 328 $
311 $ 977 Three Quarterly Periods Ended
July 2, 2016
Consumer Health, Hygiene & Engineered Packaging Specialties
Materials Total Net sales $ 1,845 $ 1,807 $ 1,219 $ 4,871
Operating income $ 156 $ 140 $ 134 $ 430 Depreciation and
amortization 183 143 64 390 Restructuring and impairment charges 7
20 2 29 Other non-cash charges (1) 9 16 10 35 Business optimization
costs (2) 2 21 2 25 Operating EBITDA $
357 $ 340 $ 212 $ 909 (1) Other non-cash charges for the
three quarterly periods ended June 2017 primarily include $16
million of stock compensation expense, $5 million step up of
inventory to fair value related to the AEP acquisition, along with
other non-cash charges. Other non-cash charges for the three
quarterly periods ended June 2016 primarily includes $17 million of
stock compensation expense, $10 million step-up of inventory to
fair value related to the Avintiv acquisition and other non-cash
charges. (2) Includes integration expenses and other business
optimization costs.
Berry Global Group,
Inc. Reconciliation Schedules
(Unaudited)
(in millions of dollars, except per share
data)
Four Quarters Quarterly Period Ended
Ended July 1, 2017 July 2, 2016
July 1, 2017
Consolidated net income $ 107 $ 96
$ 307 Add: other expense (income), net
(1
) (14 )
17 Add: interest expense, net
68 73
272 Add: income tax expense
38
24
88 Operating income $
212 $ 179
$ 684 Add: non-cash
amortization from 2006 private sale
8 8
32 Add:
restructuring and impairment
8 6
21 Add: other
non-cash charges (1)
7 7
34 Add: business
optimization and other expenses (2)
5 4
21 Adjusted operating income (8)
$ 240 $ 204
$ 792 Add:
depreciation
92 85
368 Add: amortization of
intangibles (3)
32 27
118 Operating EBITDA (8)
$ 364
$ 316
$ 1,278 Add: acquisitions
(4)
60 Add: unrealized cost savings (5)
64
Adjusted EBITDA (8)
$ 1,402
Cash flow from operating activities
$ 247 $
206
$ 870 Net additions to property, plant, and
equipment
(66 ) (55 )
(256 ) Payment of
tax receivable agreement
— —
(60 ) Adjusted free cash flow (8)
$ 181 $ 151
$ 554
Net income per diluted share
$ 0.79 $ 0.76
Other expense (income), net
(0.01 ) (0.11 ) Non-cash
amortization from 2006 private sale
0.06 0.06 Restructuring
and impairment
0.06 0.05 Other non-cash charges (1)
0.05 0.06 Business optimization costs (2)
0.04 0.03
Income tax impact on items above (6)
(0.06 )
(0.03 )
Adjusted net income per diluted share (8)
$ 0.93 $ 0.82
Estimated
Fiscal 2017 Cash flow from operating activities
$
925
Additions to property, plant, and equipment
(265
)
Tax receivable agreement payment (7)
(110
)
Adjusted free cash flow (8)
$
550
(1) Other non-cash charges in the June 2017 quarter
primarily include $5 million of stock compensation expense and
other non-cash charges. The June 2016 quarter primarily includes $3
million of stock compensation expense and $3 million step-up of
inventory to fair value related to the Avintiv acquisition. For the
four quarters ended June 2017 other non-cash charges primarily
include $19 million of stock compensation expense, $5 million
step-up of inventory to fair value related to the AEP Industries
Inc. acquisition and other non-cash charges. (2) Includes
integration expenses and other business optimization costs. (3)
Amortization excludes non-cash amortization from the 2006 private
sale of $8 million for both the July 1, 2017 and July 2, 2016
quarters and $32 million for the four quarters ended July 1, 2017.
(4) Represents Operating EBITDA for AEP for the period of July 2016
to January 19, 2017 and Adchem for the period of July 2016 to June
2017. (5) Primarily represents unrealized cost savings related to
acquisitions. (6) Income tax effects on adjusted net income were
calculated using 32% for the June 2017 and 2016 quarters. The rates
used for each represents the Company’s expected effective tax rate
for each respective period. (7) Includes $60 million tax receivable
agreement payment made in our first fiscal quarter as well as an
anticipated $50 million payment to be made at the end of our
September 2017 quarter. (8) Supplemental financial measures that
are not required by, or presented in accordance with, accounting
principles generally accepted in the United States (“GAAP”). These
non-GAAP financial measures should not be considered as
alternatives to operating or net income or cash flows from
operating activities, in each case determined in accordance with
GAAP. Adjusted EBITDA is used by our lenders for debt covenant
compliance purposes. Our projected adjusted free cash flow for
fiscal 2017 assumes $925 million of cash flow from operations less
$265 million of net additions to property, plant, and equipment and
$110 million of payments under our tax receivable agreement.
We define “adjusted free cash flow” as cash flow from operating
activities less additions to property, plant, and equipment and
payments under the tax receivable agreement. We believe adjusted
free cash flow is useful to an investor in evaluating our liquidity
because adjusted free cash flow and similar measures are widely
used by investors, securities analysts, and other interested
parties in our industry to measure a company’s liquidity. We
also believe these measures are useful to an investor in evaluating
our performance and liquidity as these measures are widely used by
investors, securities analysts and other interested parties in our
industry to measure a company’s performance and liquidity without
regard to revenue and expense recognition, which can vary depending
upon accounting methods. These non-GAAP financial measures may be
calculated differently by other companies, including other
companies in our industry, limiting their usefulness as comparative
measures
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170803005287/en/
Berry Global Group, Inc.Investor Contact:Dustin Stilwell,
1-812-306-2964ir@berryglobal.comorMedia Contact:Eva Schmitz,
1-812-306-2424evaschmitz@berryglobal.com
Berry Global (NYSE:BERY)
Historical Stock Chart
From Mar 2024 to Apr 2024
Berry Global (NYSE:BERY)
Historical Stock Chart
From Apr 2023 to Apr 2024