Business News

Bemis Company Reports 2014 First Quarter Results

Friday 25. April 2014 - Bemis Company, Inc. (NYSE:BMS) today reported first quarter 2014 diluted earnings of $0.48 per share, compared to $0.47 per share for the same quarter of 2013. Excluding the items detailed in the attached schedule, "Reconciliation of Non-GAAP Earnings per Share," adjusted diluted earnings for the first quarter of 2014 would have been $0.58 per share, compared to $0.53 for the same quarter of 2013, an increase of 9.4 percent. Net sales for the first quarter 2014 were $1.2 billion. Excluding the impact of currency, sales increased approximately one percent compared to the first quarter of 2013.

“Bemis achieved record first quarter adjusted earnings per share,” said  Henry Theisen , Bemis Company’s Chairman and Chief Executive Officer. “Our first quarter volumes are typically slower as we prepare for the seasonally stronger spring and summer months. This quarter, slightly lower sales volumes were driven by a slowdown in customer demand due to recent weather events in North America and inflationary pressures in Brazil. As we head into the second quarter, we are pleased to see healthy customer order levels, and we are commercializing new business at an accelerated pace to support expected unit volume and profit margin growth in 2014.”
HIGHLIGHTS:
Adjusted diluted earnings per share for the first quarter increased 9.4 percent to $0.58, in line with management’s guidance for the quarter.
Management announced the planned closure of a Pressure Sensitive Materials plant, resulting in a $25 million pre-tax charge in the first quarter, most of which impacted Cost of Products Sold.
Excluding the charge related to the plant closure noted above, gross profit as a percentage of net sales for the first quarter improved sequentially as compared to the fourth quarter of 2013 and was consistent with first quarter 2013 levels.
On March 31, 2014, Bemis completed the sale of its Paper Packaging Division. A $9.4 million pre-tax gain was recorded on the sale as part of other non-operating income.
Bemis repurchased approximately 1.1 million shares of its common stock at a cost of $43.2 million.
Bemis increased its quarterly cash dividend by 4 percent, the 31st consecutive annual increase.
Management established adjusted diluted earnings guidance for the second quarter of 2014 in the range of $.61 to $.66 per share and confirmed total year 2014 earnings guidance in the range of $2.40 to $2.55 per share.
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $738.2 million for the first quarter 2014 represented a decrease of 1.0 percent compared to the same period of 2013. The prior year Clysar divestiture reduced sales by 2.2 percent. The remaining net sales increase was driven primarily by the benefit of improved price and mix partially offset by a modest decrease in unit sales volume.
U.S. Packaging operating profit for the first quarter of 2014 was $91.8 million, or 12.4 percent of net sales, compared to $86.0 million, or 11.5 percent of net sales, in the same period of 2013. Excluding facility consolidation costs in 2013, segment adjusted operating profit for 2013 would have been $95.4 million, or 12.8 percent of net sales. (See attached schedule: “Reconciliation of Non-GAAP Operating Profit”.) The current period profit reflects the impact of the modest decrease in unit sales volume.
Global Packaging
Global Packaging net sales for the first quarter 2014 of $356.8 million represented a decrease of 3.2 percent compared to the first quarter of 2013. Currency translation decreased net sales by 8.4 percent, primarily driven by the Brazilian Real. The acquisition of our extrusion platform in Foshan, China increased net sales by 4.6 percent. Excluding the impact of currency translation and acquisition, the remaining increase in Global Packaging net sales reflects the benefits of improved price and mix in 2014 partially offset by lower unit sales volumes.
Global Packaging operating profit for the first quarter was $24.1 million, or 6.8 percent of net sales, compared to $25.9 million, or 7.0 percent of net sales, for the same period in 2013. Excluding the impact of facility consolidation program and acquisition-related integration items, segment adjusted operating profit would have been $25.3 million, or 6.9 percent of net sales in 2013. (See attached schedule: “Reconciliation of Non-GAAP Operating Profit”.) The net effect of currency translation decreased operating profit during the first quarter of 2014 by $2.8 million.
Pressure Sensitive Materials
Pressure Sensitive Materials net sales totaled $142.8 million for the first quarter, a 1.6 percent increase from the same period in 2013. Currency translation increased net sales by 1.4 percent compared to the prior year.
Costs associated with a plant closure negatively impacted operating profit for the first quarter by $25 million, resulting in a net operating loss of $14.5 million, compared to operating profit of $7.7 million, or 5.5 percent of net sales, for the first quarter of 2013. Excluding these plant closure costs, segment adjusted operating profit for 2014 would have been $10.5 million, or 7.4 percent of net sales. (See attached schedule: “Reconciliation of Non-GAAP Operating Profit”.) The increase in adjusted operating profit during the period reflects strengthening demand in Europe for value-added graphic products sold for advertising and promotional applications and also improved global production efficiencies.
CAPITAL STRUCTURE AND CASH FLOW
Net debt to adjusted EBITDA was 2.1 times at March 31, 2014, consistent with year-end 2013. Net debt is defined as total debt less cash, and adjusted EBITDA is defined as last twelve months adjusted operating income plus depreciation and amortization. Cash flow from operations was $12.5 million for the first quarter of 2014, reflecting the normal seasonality in first quarter cash flows.
2014 OUTLOOK
Commenting on the rest of the year, Theisen stated, “Our outlook for 2014 is unchanged. We continue to aggressively manage our business to improve operating performance and deliver growth in value-added products.”
Management expects adjusted diluted earnings per share for the second quarter of 2014 to be in the range of $0.61 to $0.66.
Management confirmed its guidance for adjusted diluted earnings per share for the full year 2014 in the range of $2.40 to $2.55 per share. This includes an anticipated effective income tax rate for 2014 of approximately 35 percent. Management also confirmed that it expects its total year 2014 cash provided by operating activities to exceed $500 million and capital expenditures to be approximately $175 million