Solid Fourth Quarter Performance, within the Company’s Most
Recent Expectations
Bemis Company, Inc. (NYSE:BMS) today reported financial results
for its fourth quarter ended December 31, 2017. Refer to the
reconciliation of Non-GAAP measures detailed in the attached
schedule, including adjusted earnings per share, adjusted EBITDA,
and net debt, and discussion of items impacting comparability in
this press release.
SUMMARY OF THE FOURTH QUARTER AND FULL YEAR 2017
Q4 Q4 YTD ($ in millions except per
share amounts) 2017 2016 %
change 2017 2016 % change
Earnings Per Share $ (0.44 ) $ 0.64 (168.8 )% $ 1.02 $ 2.48 (58.9
)% Adjusted Earnings Per Share $ 0.63 $ 0.67 (6.0 )% $ 2.39 $ 2.69
(11.2 )% Cash from Operations $ 79.5 $ 89.0 (10.7 )% $ 379.0 $
437.4 (13.4 )%
Refer to the reconciliation of Non-GAAP measures detailed in the
attached schedule, including adjusted earnings per share,
referenced in this release, which denotes that fourth quarter 2017
GAAP EPS was driven primarily by the Goodwill impairment charge in
Latin America.
2018 GUIDANCE SUMMARY
Management set guidance for the full year 2018:
- Adjusted diluted earnings per share in
the range of $2.75 to $2.90, which includes a $.31 benefit related
to U.S. tax reform at the midpoint of the range.
- Capital expenditures expected between
$150 and $160 million.
- Cash flow from operations expected to
be in the range of $420 to $450 million, which includes
approximately $50 million of restructuring and related cash
costs.
“We made progress during the second half of 2017, as reflected
in adjusted operating profit that was up nearly $35 million
compared to the first half of the year. This increase reflects
operational improvements and the early benefits of Agility, which
is our plan to fix, strengthen, and grow our business,” said
William F. Austen, Bemis Company’s President and Chief Executive
Officer. “We are focused on executing our plan to create a more
agile, streamlined, and efficient business.”
2017 LAUNCH OF “AGILITY”
During 2017, the Company launched an improvement plan called
“Agility” to fix, strengthen, and grow its business.
As part of this three-pronged approach, the fix aspect involves
the restructuring and cost savings plan announced in June and
increased in September to target pre-tax annual savings of $65
million. As anticipated, $4.1 million of this benefit was realized
in 2017; the Company anticipates approximately $35 million of
benefit in 2018, with the remainder of the plan benefit in 2019.
Estimated total pre-tax costs to implement the plan are $110 to
$125 million. Of that total, pre-tax cash expense is estimated
between $75 and $85 million. The announced plan includes optimizing
manufacturing capacity, consolidating office space, and reducing
SG&A cost structure and other costs.
The strengthen and grow aspects of Agility create the foundation
for the Company’s long-term success by simplifying its product
portfolio and organizational structure, rebalancing R&D efforts
to focus on manufacturing improvements, and deliberately pursuing
targeted areas of growth in its North American business. The
Company’s actions during 2018 related to these work streams will
lay the foundation for future growth.
BUSINESS SEGMENT RESULTS
New Reportable Segment Structure
Effective with reporting for the fourth quarter of 2017, the
Company realigned its segment reporting to transition from two
reportable segments to three reportable segments as follows: U.S.
Packaging, Latin America Packaging, and Rest of World Packaging.
The U.S. Packaging business segment is unchanged. The Company will
now report Latin America Packaging and Rest of World Packaging
business segments, which had previously been aggregated and named
Global Packaging.
The Latin America Packaging segment includes all food and
non-food packaging-related manufacturing operations located in
Latin America. The Rest of World Packaging business segment
includes all food and non-food packaging-related manufacturing
operations located in Europe and Asia-Pacific, as well as medical
device and pharmaceutical packaging manufacturing operations in the
U.S., Europe, and Asia.
Historical detail of the new reportable segments is provided in
the supplemental schedules on the Company’s investor website and in
the attached schedules in this press release.
U.S. Packaging
U.S. Packaging net sales of $643.3 million for the fourth
quarter of 2017 represented an increase of 1.8 percent compared to
the same period of 2016. Unit volumes were relatively flat compared
to the prior fourth quarter. The increase in net sales was driven
primarily by sales price increases partially offset by mix of
products sold.
U.S. Packaging net sales of $2,626.0 million for the full year
2017 represented an increase of 0.2 percent compared to the same
period of 2016. Compared to the prior year, unit volumes were up
nearly 1 percent.
U.S. Packaging operating profit decreased to $89.3 million in
the fourth quarter of 2017, or 13.9 percent of net sales, compared
to $94.0 million, or 14.9 percent of net sales, in 2016.
U.S. Packaging operating profit decreased to $352.5 million for
the full year 2017, or 13.4 percent of net sales, compared to
$400.0 million, or 15.3 percent of net sales, in 2016. Compared to
the prior year, lower profits were driven by mix of products sold,
previously-negotiated contractual selling price reductions on
select products, and inefficiencies related to an ERP system
implementation at one of the Company's manufacturing facilities
during the second quarter.
Latin America Packaging
Latin America Packaging net sales of $178.7 million for the
fourth quarter of 2017 represented a decrease of 0.6 percent
compared to the same period of 2016. Currency translation decreased
net sales by 0.5 percent. Organic sales were approximately flat
reflecting flat unit volumes and increased selling prices that were
offset by unfavorable sales mix driven by the economic environment
in Brazil.
Latin America Packaging net sales of $711.4 million for the full
year of 2017 represented an increase of 1.2 percent compared to the
full year of 2016. Currency translation increased net sales by 4.0
percent. Organic sales decline of 2.8 percent reflects decreased
unit volumes of approximately 4 percent and unfavorable sales mix
driven by the challenging economic environment in Brazil, partially
offset by increased selling prices.
Latin America Packaging operating profit for the fourth quarter
was $6.2 million, compared to $15.2 million for the same period in
2016. Latin America Packaging operating profit for the full year
was $30.0 million, compared to $50.0 million for the same period in
2016. Compared to the prior year, lower profits in Latin America
Packaging were driven primarily by the impacts of the challenging
economic environment in Brazil, including lower unit volumes and
unfavorable mix of products sold.
Rest of World Packaging
Rest of World Packaging net sales of $181.6 million for the
fourth quarter of 2017 represented an increase of 3.1 percent
compared to the same period of 2016. Currency translation increased
net sales by 4.1 percent. The acquisition of Evadix increased net
sales by 0.5 percent. Organic sales decline of 1.5 percent reflects
unfavorable mix of products sold, partially offset by increased
unit volumes of approximately 8 percent and increased selling
prices.
Rest of World Packaging net sales of $708.8 million for the full
year 2017 represented an increase of 4.2 percent compared to the
full year of 2016. Currency translation decreased net sales by 1.7
percent. The acquisitions of Steripack and Evadix increased net
sales by 3.7 percent. Organic sales growth of 2.2 percent reflects
increased unit volumes of approximately 6 percent and increased
selling prices, partially offset by unfavorable mix of products
sold.
Rest of World Packaging operating profit for the fourth quarter
was $15.4 million, compared to $18.2 million for the same period in
2016. Rest of World Packaging operating profit for the full year
2017 was $61.1 million, compared to $64.0 million for the same
period in 2016. Compared to the prior year, lower profits in Rest
of World Packaging were driven primarily by rising raw material
input prices in Europe and mix of products sold.
SIGNIFICANT ITEMS IMPACTING THE COMPARABILITY OF FOURTH
QUARTER U.S. GAAP RESULTS
While the following items impact the Company’s fourth quarter
U.S. GAAP results, they do not impact the Company's operational
segment results, compliance with debt covenants, or cash flows.
Goodwill Impairment
In accordance with the Financial Accounting Standards Board’s
guidance for goodwill, during the fourth quarter of 2017, the
Company recognized a non-cash goodwill impairment charge of $196.6
million pretax related to the Latin America Packaging segment. This
impairment is a result of the impact on profits from the decline in
the economic environment in Brazil during 2017 and the related
forecasted slower economic recovery.
Pension Settlement Charge
During the fourth quarter of 2017, the Company recognized a
non-cash pension settlement charge of $10.1 million pretax. The
Company initiated a program during the third quarter of 2017 in
which it offered terminated vested participants in the U.S.
qualified retirement plans the opportunity to receive their
benefits early as a lump sum. This charge does not impact the
Company's operations, compliance with debt covenants, or cash
flows.
Impact of U.S. Tax Reform
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (TCJA)
was signed by the President of the United States and became enacted
law. As a result of this legislation, the Company recorded a $67.2
million non-cash tax benefit in the fourth quarter of 2017. This
net benefit was driven primarily by the revaluation of deferred tax
liabilities under TCJA, partially offset by the one-time transition
tax on unremitted earnings.
CASH FLOW AND CAPITAL STRUCTURE
Cash flow from operations for the twelve months ended
December 31, 2017 was $379.0 million, compared to $437.4
million in the prior year. Cash flow from operations included cash
used for restructuring and related activities of $24.5 million in
2017 and $8.2 million in 2016. The decline in 2017 cash flow from
operations was driven primarily by profit levels in 2017, partially
offset by working capital improvements made during 2017.
Total company net debt to adjusted EBITDA was 2.7 times at
December 31, 2017.
Capital expenditures totaled $188.5 million for the twelve
months ended December 31, 2017, reflecting planned investment
to support productivity improvements in the U.S. Packaging segment
and growth initiatives throughout the Company’s business.
For the full year 2017, the Company repurchased 2.2 million
shares for $103.8 million. At December 31, 2017, the remaining
Board authorization for the repurchase of Bemis common stock was
18.2 million shares.
OUTLOOK
Management expects adjusted diluted earnings per share to be in
the range of $2.75 to $2.90 for the full year 2018, which includes
a $.31 per share benefit related to U.S. tax reform at the midpoint
of the range.
“Our adjusted earnings guidance reflects a double-digit increase
over last year, driven in part by U.S. tax reform and in part by
the decisive actions we have taken to improve our cost structure
through the fix portion of our Agility plan,” said William F.
Austen, Bemis Company’s President and Chief Executive Officer. “The
changes we are making through the strength & grow aspects of
our Agility plan lay an even stronger foundation for long-term
growth.”
Austen continued, “In our U.S. business, we have initiated what
we call “agile lane”, which is a pilot that aligns our people,
processes, and assets to excel at short-run business. This effort
deliberately focuses on the pockets of growth that are available in
the U.S. today.”
Austen further commented, “In our Latin American business, we
continue to focus on what we can control through fixed and variable
cost reductions, and we anticipate profit improvement from this in
2018. The impact of the economic environment in Brazil has
stabilized, and our business is well-positioned to prosper when the
economy turns in the future. In our Rest of World business, we
anticipate that net growth will continue in 2018 and that margins
will expand, particularly driven by growth in our healthcare
business.”
Austen concluded, “During 2018, we are taking action to build on
Bemis Company’s strong foundation to create value for our
shareholders over the long-term. We remain committed to a strong
balance sheet, to returning free cash flow to our shareholders, and
to deliberately pursuing pockets of growth that will deliver
long-term health and success for Bemis Company.”
Management expects full year 2018 cash from operations to be in
the range of $420 to $450 million. This guidance includes
approximately $50 million of restructuring and related cash costs.
Cash from operations improvement in 2018 as compared to the prior
year is driven by planned profit improvements as well as planned
inventory reductions.
Management expects capital expenditures for 2018 between $150
and $160 million.
Management expects an effective income tax rate for 2018 of
approximately 24 percent, which incorporates the benefit of recent
U.S. tax reform.
PRESENTATION OF NON-GAAP INFORMATION
This press release refers to non-GAAP financial measures:
adjusted diluted earnings per share, organic sales growth or
decline, adjusted EBITDA, and net debt to adjusted EBITDA, and
adjusted return on invested capital. These non-GAAP financial
measures adjust for factors that are unusual or unpredictable.
These measures exclude the impact of certain amounts related to the
effect of changes in currency exchange rates, acquisitions, and
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. All historical non-GAAP
information is reconciled with reported GAAP results. Forward
looking non-GAAP measures contained in our 2018 outlook are
reconciled to GAAP measures as practically as possible. However, we
are not providing forward looking guidance for full year 2018 U.S.
GAAP guidance or a reconciliation of full year 2018 adjusted EPS to
U.S. GAAP EPS because we are unable to predict with reasonably
certainty the ultimate outcome of certain significant items without
unreasonable effort. These items include, but are not limited to,
restructuring expenses, asset impairments, possible gains or losses
on the sale of businesses or other assets, certain other gains or
losses and the income tax effects of these items and/or other
income tax-related events. These items are uncertain, depend on
various factors, and could have a material impact on U.S. GAAP EPS
for the guidance period.
FORWARD-LOOKING STATEMENTS
This release contains certain estimates, predictions, and other
“forward-looking statements” (as defined in the Private Securities
Litigation Reform Act of 1995, and within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended). Forward-looking statements are generally identified with
the words “believe,” “expect,” “anticipate,” “intend,” “estimate,”
“target,” “may,” “will,” “plan,” “project,” “should,” “continue,”
or the negative thereof or other similar expressions, or discussion
of future goals or aspirations, which are predictions of or
indicate future events and trends and which do not relate to
historical matters. Such statements are based on information
available to management as of the time of such statements and
relate to, among other things, expectations of the business
environment in which we operate, projections of future performance
(financial and otherwise), including those of acquired companies,
perceived opportunities in the market and statements regarding our
strategy and vision. Forward-looking statements involve known and
unknown risks, uncertainties, and other factors, which may cause
actual results, performance, or achievements to differ materially
from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise.
Factors that could cause actual results to differ from those
expected include, but are not limited to:
- Changes in the value of our goodwill
and other intangible assets;
- The ability of our foreign operations
to maintain working efficiencies, as well as properly adjust to
continuing changes in global politics, legislation, and economic
conditions;
- A failure to realize the full potential
of our restructuring activities;
- Changes in the competitive conditions
within our markets, as well as changes in the demand for our
goods;
- Our ability to retain and build upon
the relationships and sales of our key customers;
- The potential loss of business or
increased costs due to customer or vendor consolidation;
- The costs, availability, and terms of
acquiring our raw materials (particularly for polymer resins and
adhesives), as well as our ability to pass any price changes on to
our customers;
- Changes in import and export regulation
that could subject us to liability or impair our ability to compete
in international markets;
- Variances in key exchange rates that
could affect the translation of the financial statements of our
foreign entities;
- Our ability to effectively implement
and update our global enterprise resource planning ("ERP")
systems;
- Our ability to realize the benefits of
our acquisitions and divestitures, and whether we are able to
properly integrate those businesses we have acquired;
- Fluctuations in interest rates and our
borrowing costs, along with other key financial variables;
- A potential failure in our information
technology infrastructure or applications and their ability to
protect our key functions from cyber-crime and other malicious
content;
- Changes in our credit rating;
- Unexpected outcomes in our current and
future administrative and litigation proceedings;
- Changes in governmental regulations,
particularly in the areas of environmental, health and safety
matters, fiscal incentives, and foreign investment;
- Our ability to effectively introduce
new products into the market and to protect or retain our
intellectual property rights;
- Changes in our ability to attract and
retain high performance employees; and
- Our ability to manage all costs
associated with our pension plans.
These and other risks, uncertainties, and assumptions identified
from time to time in our filings with the Securities and Exchange
Commission, including without limitation, those described under
Item 1A "Risk Factors" of our Annual Report on Form 10-K and our
quarterly reports on Form 10-Q, could cause actual future results
to differ materially from those projected in the forward-looking
statements. In addition, actual future results could differ
materially from those projected in the forward-looking statements
as a result of changes in the assumptions used in making such
forward-looking statements.
INVESTOR CONFERENCE CALL
Bemis Company, Inc. will webcast an investor telephone
conference regarding its fourth quarter and full year 2017
financial results this morning at 10:00 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.
Bemis Company, Inc. will webcast an investor telephone
conference regarding its first quarter 2018 financial results on
April 26, 2018 at 10:00 a.m., Eastern Time.
ABOUT BEMIS COMPANY, INC.
Bemis Company, Inc. (“Bemis” or the “Company”) is a major
supplier of flexible and rigid plastic packaging used by leading
food, consumer products, healthcare, and other companies worldwide.
Founded in 1858, Bemis reported 2017 net sales from continuing
operations of $4.0 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 16,500 individuals worldwide. More
information about Bemis is available at our website,
www.bemis.com.
BEMIS
COMPANY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF
INCOME(in millions, except per share
amounts)(unaudited)
Three Months EndedDecember
31,
Twelve Months EndedDecember
31,
2017 2016 2017 2016 Net
sales $ 1,003.6 $ 988.0 $ 4,046.2 $ 4,004.4 Cost of products sold
809.9 772.4 3,261.0 3,138.2 Gross
profit 193.7 215.6 785.2 866.2 Operating expenses: Selling,
general and administrative expenses 93.6 96.6 380.4 392.2 Research
and development 9.3 11.8 42.9 46.5 Restructuring and other costs
29.4 3.8 70.5 28.6 Goodwill impairment charge 196.6 — 196.6 — Other
operating income (7.0 ) (1.3 ) (20.9 ) (10.4 ) Operating
(loss) income (128.2 ) 104.7 115.7 409.3 Interest expense
17.1 15.7 65.8 60.2 Other non-operating income (0.6 ) (0.7 ) (2.8 )
(1.8 ) (Loss) income before income taxes (144.7 ) 89.7 52.7
350.9 Provision for income taxes (104.0 ) 29.2 (41.3
) 114.7 Net (loss) income $ (40.7 ) $ 60.5 $
94.0 $ 236.2 Basic earnings per share $ (0.44
) $ 0.65 $ 1.03 $ 2.51 Diluted earnings
per share $ (0.44 ) $ 0.64 $ 1.02 $ 2.48
Cash dividends paid per share $ 0.30 $ 0.29 $
1.20 $ 1.16 Weighted average shares
outstanding: Basic 90.8 93.2 91.5 94.3 Diluted 91.2 93.9 91.9 95.1
BEMIS
COMPANY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET(in
millions)(unaudited)
December 31, 2017
December 31, 2016
ASSETS
Cash and cash equivalents $ 71.1 $ 74.2 Trade receivables
448.7 461.9 Inventories 620.2 549.4 Prepaid expenses and other
current assets 97.1 80.0 Total current assets 1,237.1
1,165.5 Property and equipment, net 1,318.1
1,283.8 Goodwill 852.7 1,028.8 Other
intangible assets, net 142.3 155.2 Deferred charges and other
assets 149.7 82.4 Total other long-term assets
1,144.7 1,266.4
TOTAL ASSETS $ 3,699.9
$ 3,715.7
LIABILITIES
Current portion of long-term debt $ 5.0 $ 2.0 Short-term
borrowings 16.0 15.3 Accounts payable 477.2 378.0 Employee-related
liabilities 73.1 79.6 Accrued income and other taxes 30.5 31.2
Other current liabilities 64.3 70.0 Total current
liabilities 666.1 576.1 Long-term debt, less
current portion 1,542.4 1,527.8 Deferred taxes 153.5 219.7 Other
liabilities and deferred credits 136.7 132.4
TOTAL LIABILITIES 2,498.7 2,456.0
EQUITY
Common stock issued (129.1 and 128.8 shares, respectively)
12.9 12.9 Capital in excess of par value 590.4 581.5 Retained
earnings 2,324.8 2,341.7 Accumulated other comprehensive loss
(394.5 ) (447.8 ) Common stock held in treasury (38.3 and 36.1
shares at cost, respectively) (1,332.4 ) (1,228.6 )
TOTAL
EQUITY 1,201.2 1,259.7
TOTAL
LIABILITIES AND EQUITY $ 3,699.9 $ 3,715.7
BEMIS
COMPANY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS(in millions)(unaudited)
Twelve Months Ended December 31, 2017
2016
Cash flows from
operating activities
Net income $ 94.0 $ 236.2 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 169.8 162.1 Goodwill impairment charge 196.6 — Excess
tax benefit from share-based payment arrangements — (4.5 )
Share-based compensation 17.4 18.1 Deferred income taxes (131.2 )
26.2 Income of unconsolidated affiliated company (2.9 ) (2.2 ) Cash
dividends received from unconsolidated affiliated company — 2.7 Net
loss (gain) on disposal of property and equipment 6.6 (0.1 )
Changes in working capital, excluding effect of acquisitions and
currency 15.6 (0.4 ) Changes in other assets and liabilities 13.1
(0.7 ) Net cash provided by operating activities
379.0 437.4
Cash flows from
investing activities
Additions to property and equipment (188.5 ) (208.3 ) Business
acquisitions and adjustments, net of cash acquired (3.9 ) (114.5 )
Proceeds from sale of property and equipment 14.5 11.6
Net cash used in investing activities (177.9 ) (311.2
)
Cash flows from
financing activities
Proceeds from issuance of long-term debt 2.2 299.0 Repayment of
long-term debt — (23.8 ) Net borrowing (repayment) of commercial
paper 17.0 (110.0 ) Net repayment of short-term debt (3.0 ) (8.1 )
Cash dividends paid to shareholders (111.2 ) (113.9 ) Common stock
purchased for the treasury (103.8 ) (143.9 ) Excess tax benefit
from share-based payment arrangements — 4.5 Stock incentive
programs and related tax withholdings (8.5 ) (14.2 ) Net
cash used in financing activities (207.3 ) (110.4 ) Effect
of exchange rates on cash and cash equivalents 3.1 (0.8 )
Net (decrease) increase in cash and cash equivalents (3.1 )
15.0 Cash and cash equivalents balance at beginning of year
74.2 59.2 Cash and cash equivalents balance at
end of period $ 71.1 $ 74.2
BEMIS COMPANY,
INC. AND SUBSIDIARIESSEGMENT
SALES AND PROFIT INFORMATION(in millions, except per
share amounts and percentages)(unaudited)
Three Months Ended December 31, Twelve
Months Ended December 31, 2017 2016
2017 2016 Net sales U.S. Packaging (a) $ 643.3
$ 632.0 $ 2,626.0 $ 2,621.1 Latin America Packaging (b) 178.7 179.8
711.4 703.1 Rest of World Packaging (c) 181.6 176.2
708.8 680.2 Total net sales $ 1,003.6 $ 988.0
$ 4,046.2 $ 4,004.4 Segment operating
profit U.S. Packaging (d) $ 89.3 $ 94.0 $ 352.5 $ 400.0 Latin
America Packaging (e) 6.2 15.2 30.0 50.0 Rest of World Packaging
(f) 15.4 18.2 61.1 64.0 Restructuring and other costs 29.4
3.8 70.5 28.6 Goodwill impairment charge 196.6 — 196.6 — General
corporate expenses 13.1 18.9 60.8 76.1
Operating (loss) income (128.2 ) 104.7 115.7 409.3
Interest expense 17.1 15.7 65.8 60.2 Other non-operating income
(0.6 ) (0.7 ) (2.8 ) (1.8 ) (Loss) income before income
taxes $ (144.7 ) $ 89.7 $ 52.7 $ 350.9
Operating profit return on sales U.S. Packaging (d /
a) 13.9 % 14.9 % 13.4 % 15.3 % Latin America Packaging (e / b) 3.5
% 8.5 % 4.2 % 7.1 % Rest of World Packaging (f / c) 8.5 % 10.3 %
8.6 % 9.4 %
BEMIS COMPANY,
INC. AND SUBSIDIARIESSEGMENT SALES AND PROFIT
INFORMATION(in millions, except per share amounts and
percentages)(unaudited)
Components of changes in net
sales
Q4 2017% Change YoY
Q4 2017 YTD% Change YoY
U.S Packaging: Organic sales growth * 1.8
%
0.2
%
U.S. Packaging 1.8
%
0.2
%
Latin America Packaging: Currency effect (0.5 )% 4.0
%
Organic sales decline * (0.1 )% (2.8 )%
Latin America
Packaging (0.6 )% 1.2
%
Rest of World Packaging: Currency effect 4.1
%
(1.7 )% Acquisition effect 0.5
%
3.7
%
Organic sales growth (decline) * (1.5 )% 2.2
%
Rest of World Packaging 3.1
%
4.2
%
Total Company: Currency effect 0.6
%
0.4
%
Acquisition effect 0.1
%
0.6
%
Organic sales growth * 0.9
%
—
%
Total change in net sales 1.6
%
1.0
%
*Organic sales growth (decline) = sum of price, mix, and
volume
BEMIS COMPANY,
INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP EARNINGS PER SHARE AND NET
DEBT(in millions, except per share
amounts)(unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31, 2017
2016 2017 2016 Non-GAAP earnings per
share Diluted earnings per share, as reported $ (0.44 ) $ 0.64
$ 1.02 $ 2.48 Non-GAAP adjustments per share, net of taxes:
Restructuring and related costs (1) 0.12 0.04 0.42 0.16 Goodwill
impairment charge (2) 1.59 — 1.59 — Pension settlement charge (3)
0.08 — 0.08 — Tax reform (4) (0.74 ) — (0.74 ) — Other costs (5)
0.02 (0.01 ) 0.02 0.05 Diluted earnings per
share, as adjusted $ 0.63 $ 0.67 $ 2.39 $ 2.69
(1) Restructuring and related costs include costs related to
the 2016 restructuring plan focused on plant closures in Latin
America and the 2017 restructuring plan focused on aligning the
Company's cost structure to its environment. Restructuring related
costs include professional fees for consultants and asset
impairment charges. Restructuring and related costs totaled $57.7
million and $22.5 million for the years ended December 31, 2017 and
2016, respectively. Net of taxes, restructuring and related costs
totaled approximately $38.6 million and $14.9 million for the years
ended December 31, 2017 and 2016, respectively. (2) The Company
recognized a non-cash goodwill impairment charge related to the
Latin America Packaging segment. This impairment is a result of the
impact on profits from the decline in the economic environment in
Brazil during 2017 and the related forecasted slower economic
recovery. The impairment charge recognized by the Company was
$196.6 million pre-tax and $145.5 million, net of taxes. (3) The
Company initiated a program during the third quarter of 2017 in
which it offered terminated vested participants in the U.S.
qualified retirement plans the opportunity to receive their
benefits early as a lump sum. The Company recognized a $10.1
million pre-tax pension settlement charge in the fourth quarter of
2017. This charge was $6.8 million, net of taxes. (4) On December
22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA") was signed by
the President of the United States and became enacted law. The
Company recognized a $67.2 million non-cash tax benefit in the
fourth quarter of 2017. This benefit is due to the revaluation of
deferred tax assets and liabilities from the change in the U.S.
Federal statutory tax rate from 35 percent to 21 percent netted
against the increase to taxes from the one-time transition tax on
unremitted earnings. (5) In 2017, other costs are comprised of
acquisition costs and hurricane-related expenses incurred at the
Puerto Rico facility. In 2016, other costs are comprised primarily
of acquisition-related 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). Other costs also
include a gain on sale of land and building related to the sale of
a plant in Latin America.
December 31, 2017
Net Debt Current portion of long-term debt $ 5.0 Short-term
borrowings 16.0 Long-term debt, less current portion 1,542.4
Total debt 1,563.4 Less cash and cash equivalents (71.1 ) Net debt
$ 1,492.3
BEMIS COMPANY,
INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP RETURN ON INVESTED CAPITAL
AND EBITDA(in millions)(unaudited)
Three Months Ended
12 months endedDecember
31,2017
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
Net (loss) income $ (40.7 ) $ 55.6 $ 28.0 $ 51.1 $ 94.0
Income taxes (104.0 ) 26.4 13.1 23.2 (41.3 ) Interest expense 17.1
16.7 16.0 16.0 65.8 Other non-operating income (0.6 ) (0.7 ) (0.6 )
(0.9 ) (2.8 )
Earnings before interest and taxes (EBIT)
(128.2 ) 98.0 56.5 89.4 115.7 Restructuring and other costs 29.4
12.9 23.8 4.4 70.5 Goodwill impairment charge 196.6 —
— — 196.6
Adjusted EBIT (a) 97.8 110.9
80.3 93.8 382.8 Depreciation and amortization 42.3 42.5
43.2 41.8 169.8
Adjusted EBITDA
$ 140.1 $ 153.4 $ 123.5 $ 135.6 $ 552.6
Average Invested Capital(1) (b)
$ 2,743.3
Assumed tax rate(2) (c) 35.0 %
Adjusted ROIC (a * (1 - c) / b) 9.1 %
Three
Months Ended
12 months endedDecember
31,2016
December 31, 2016 September 30,
2016
June 30,2016
March 31,2016
Net income $ 60.5 $ 68.6 $ 50.9 $ 56.2 $ 236.2 Income
taxes 29.2 33.1 24.7 27.7 114.7 Interest expense 15.7 15.1 14.0
15.4 60.2 Other non-operating (income) expense (0.7 ) (0.6 ) (0.6 )
0.1 (1.8 )
Earnings before interest and taxes (EBIT)
104.7 116.2 89.0 99.4 $ 409.3 Restructuring and other costs 3.8
4.4 19.6 0.8 28.6
Adjusted
EBIT (a) 108.5 120.6 108.6 100.2 437.9 Depreciation and
amortization 40.7 40.1 40.5 40.8 162.1
Adjusted EBITDA $ 149.2 $ 160.7 $ 149.1
$ 141.0 $ 600.0
Average Invested
Capital(1) (b) $ 2,680.8
Assumed tax
rate(2) (c) 35.0 %
Adjusted ROIC (a * (1 - c)
/ b) 10.6 % (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.
BEMIS COMPANY, INC.
AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Effective with reporting for the fourth quarter of 2017, the
Company realigned its segment reporting to transition from two
reportable segments to three reportable segments as follows: U.S.
Packaging, Latin America Packaging, and Rest of World Packaging.
The U.S. Packaging business segment is unchanged. The Company will
now report Latin America Packaging and Rest of World Packaging
business segments, which had previously been aggregated and named
Global Packaging.
The Latin America Packaging segment includes all food and
non-food packaging-related manufacturing operations located in
Latin America. The Rest of World Packaging business segment
includes all food and non-food packaging-related manufacturing
operations located in Europe and Asia-Pacific as well as medical
device and pharmaceutical packaging manufacturing operations in the
U.S., Europe, and Asia.
The changes to the business segments have no effect on the
historical consolidated results of operations. Prior period segment
results have been conformed to the new business segment
presentation.
A summary of the Company's business activities recast in these
three new business segments follows:
Segment Sales and Profit Information Three Months
Ended (in millions, except percentages)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
Net sales U.S. Packaging (a) $ 672.3 $ 661.5 $ 648.9 $ 632.0 Latin
America Packaging (b) 183.8 170.9 178.0 179.8 Rest of World
Packaging (c) 179.0 179.7 168.5 176.2
Total net sales $ 1,035.1 $ 1,012.1 $ 995.4 $
988.0 Segment operating profit U.S. Packaging (d) $
99.6 $ 80.1 $ 83.5 $ 94.0 Latin America Packaging (e) 7.3 2.9 13.6
15.2 Rest of World Packaging (f) 17.3 14.8 13.6 18.2
Restructuring and other costs 12.9 23.8 4.4 3.8 General corporate
expenses 13.3 17.5 16.9 18.9
Operating income 98.0 56.5 89.4 104.7 Interest expense 16.7
16.0 16.0 15.7 Other non-operating income (0.7 ) (0.6 ) (0.9 ) (0.7
) Income before income taxes $ 82.0 $ 41.1 $
74.3 $ 89.7
Segment operating profit
return on sales U.S. Packaging (d / a) 14.8 % 12.1 % 12.9 %
14.9 % Latin America Packaging (e / b) 4.0 % 1.7 % 7.6 % 8.5 % Rest
of World Packaging (f / c) 9.7 % 8.2 % 8.1 % 10.3 %
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Segment Sales Information
Q3 2017%
ChangeYoY
Q2 2017%
ChangeYoY
Q1 2017%
ChangeYoY
Q4 2016%
ChangeYoY
Components of changes in net sales U.S. Packaging:
Organic sales growth (decline) * 2.2
%
(1.4 )% (1.8 )% (3.6 )%
U.S. Packaging 2.2
%
(1.4 )% (1.8 )% (3.6 )%
Latin America Packaging:
Currency effect 0.4
%
4.0
%
14.5
%
(0.2 )% Acquisition effect —
%
—
%
—
%
5.0
%
Organic sales growth (decline) * (4.0
)%
(7.3 )% (0.3 )% 2.9
%
Latin America Packaging (3.6 )% (3.3 )% 14.2
%
7.7
%
Rest of World Packaging: Currency effect 0.6
%
(5.4 )% (6.4 )% (8.1 )% Acquisition effect —
%
3.2
%
12.4
%
10.3
%
Organic sales growth (decline) * (0.6 )% 5.8
%
5.2
%
7.8
%
Rest of World Packaging —
%
3.6
%
11.2
%
10.0
%
Total Company: Currency effect 0.2
%
(0.2 )% 1.3
%
(1.4 )% Acquisition effect —
%
0.5
%
1.9
%
2.5
%
Organic sales growth (decline) * 0.6
%
(1.2 )% (0.4 )% (0.6 )%
Total change in net sales 0.8
%
(0.9 )% 2.8
%
0.5
%
* Organic sales growth (decline) = sum of price, mix, and
volume
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Three Months Ended Business Segments (in
millions)
September 30,2017
June 30,2017
March 31,2017
December 31,2016
Sales including intersegment sales: U.S. Packaging $ 684.5 $ 672.7
$ 654.9 $ 637.3 Latin America Packaging 184.7 172.1 178.8 180.8
Rest of World Packaging 182.2 183.6 171.6 179.1 Intersegment
sales: U.S. Packaging (12.2 ) (11.2 ) (6.0 ) (5.3 ) Latin America
Packaging (0.9 ) (1.2 ) (0.8 ) (1.0 ) Rest of World Packaging (3.2
) (3.9 ) (3.1 ) (2.9 ) Total net sales $ 1,035.1 $ 1,012.1
$ 995.4 $ 988.0 Segment operating
profit U.S. Packaging $ 99.6 $ 80.1 $ 83.5 $ 94.0 Latin America
Packaging 7.3 2.9 13.6 15.2 Rest of World Packaging 17.3 14.8 13.6
18.2 Restructuring and other costs 12.9 23.8 4.4 3.8 General
corporate expenses 13.3 17.5 16.9 18.9
Operating income 98.0 56.5 89.4 104.7 Interest expense 16.7
16.0 16.0 15.7 Other non-operating income (0.7 ) (0.6 ) (0.9 ) (0.7
) Income before income taxes $ 82.0 $ 41.1 $
74.3 $ 89.7
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Segment Sales and Profit Information Twelve Months
Ended December 31, (in millions, except percentages)
2016 2015 Net sales U.S. Packaging (a) $
2,621.1 $ 2,747.5 Latin America Packaging (b) 703.1 693.1 Rest of
World Packaging (c) 680.2 630.8 Total net sales $
4,004.4 $ 4,071.4 Segment operating profit
U.S. Packaging (d) $ 400.0 $ 391.8 Latin America Packaging (e) 50.0
60.9 Rest of World Packaging (f) 64.0 55.6 Restructuring and
other costs 28.6 12.1 General corporate expenses 76.1 86.6
Operating income 409.3 409.6 Interest expense
60.2 51.7 Other non-operating income (1.8 ) (6.0 ) Income
before income taxes $ 350.9 $ 363.9
Segment operating profit return on sales U.S. Packaging (d /
a) 15.3 % 14.3 % Latin America Packaging (e / b) 7.1 % 8.8 % Rest
of World Packaging (f / c) 9.4 % 8.8 %
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Segment Sales Information
2016% Change YoY
2015% Change YoY
Components of changes in net sales U.S. Packaging:
Divestiture effect —
%
(1.3 )% Organic sales decline * (4.6 )% (2.7 )%
U.S.
Packaging (4.6 )% (4.0 )%
Latin America
Packaging: Currency effect (15.7 )% (27.4 )% Acquisition effect
6.0
%
0.5
%
Organic sales growth * 11.1
%
10.3
%
Latin America Packaging 1.4
%
(16.6 )%
Rest of World Packaging: Currency effect
(5.2 )% (6.6 )% Acquisition effect 8.1
%
—
%
Organic sales growth * 4.9
%
3.4
%
Rest of World Packaging 7.8
%
(3.2 )%
Total Company: Currency effect (3.5 )% (6.2
)% Acquisition/divestiture effect 2.4
%
(0.8 )% Organic sales growth (decline) * (0.5 )% 0.7
%
Total change in net sales (1.6 )% (6.3 )% * Organic
sales growth (decline) = sum of price, mix, and volume
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Twelve Months Ended December 31, Business Segments
(in millions) 2016 2015 Sales including
intersegment sales: U.S. Packaging $ 2,646.8 $ 2,772.8 Latin
America Packaging 707.0 696.9 Rest of World Packaging 696.4 648.7
Intersegment sales: U.S. Packaging (25.7 ) (25.3 ) Latin
America Packaging (3.9 ) (3.8 ) Rest of World Packaging (16.2 )
(17.9 ) Total net sales $ 4,004.4 $ 4,071.4
Segment operating profit U.S. Packaging $ 400.0 $ 391.8 Latin
America Packaging 50.0 60.9 Rest of World Packaging 64.0 55.6
Restructuring and other costs 28.6 12.1 General corporate
expenses 76.1 86.6 Operating income 409.3 409.6
Interest expense 60.2 51.7 Other non-operating income (1.8 )
(6.0 ) Income before income taxes $ 350.9 $ 363.9
BEMIS COMPANY,
INC. AND SUBSIDIARIESHISTORICAL
DETAIL OF NEW REPORTABLE SEGMENTS(in millions, except
percentages)(unaudited)
Business Segments (in millions) 2016
2015 Total assets: U.S. Packaging $ 2,007.7 $ 1,982.5
Latin America Packaging 779.2 690.4 Rest of World Packaging 706.1
601.1 Corporate 222.7 215.8 Total $ 3,715.7 $ 3,489.8
Restructuring and other costs: Latin America
Packaging $ 18.9 $ 1.6 Rest of World Packaging 7.7 7.8 Corporate
2.0 2.7 Total $ 28.6 $ 12.1
Depreciation
and amortization: U.S. Packaging $ 93.7 $ 97.8 Latin America
Packaging 26.2 22.2 Rest of World Packaging 27.9 25.5 Corporate
14.3 12.6 Total $ 162.1 $ 158.1
Additions
to property and equipment: U.S. Packaging $ 131.2 $ 127.5 Latin
America Packaging 32.9 23.8 Rest of World Packaging 36.8 55.6
Corporate 7.4 12.5 Total $ 208.3 $ 219.4
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180201005515/en/
Bemis Company Inc.Erin M. Winters,
920-527-5288Director of Investor Relations
Bemis (NYSE:BMS)
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