SUMMARY:
- Second quarter adjusted diluted
earnings per share were $0.67 in 2016 ($0.53 on a GAAP basis).
- Adjusted return on invested capital was
10.4 percent at June 30, 2016, compared to 10.0 percent at
June 30, 2015.
- On April 29, 2016, Bemis acquired the
medical device packaging operations and related value-added
services of SteriPack Group.
- Bemis initiated a restructuring
program, reflecting in part the further integration of the recent
Emplal acquisition. The Company will close four plants in Latin
America to improve efficiencies and reduce fixed costs.
- Total program charges incurred
throughout 2016 and 2017 are estimated to be $28 to $30 million (at
current exchange rates).
- Cost reductions from the program are
expected to reach the full run rate of approximately $16 million
(at current exchange rates) annually during 2018.
- The benefits of this program will
offset headwinds from the impact of the economic environment in
Latin America, helping the Company achieve its long-term margin
targets in the Global Packaging segment.
- Management confirmed full year adjusted
EPS to be in the range of $2.68 to $2.78 ($2.47 to $2.57 on a GAAP
basis, which considers expected restructuring charges during the
balance of the year).
Bemis Company, Inc. (NYSE:BMS) today reported second quarter
2016 diluted earnings per share from continuing operations of
$0.53. 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 $0.67
in both 2016 and 2015. The net impact of currency translation
decreased earnings per share in the second quarter of 2016 by
approximately $0.02, as compared to the prior second quarter.
“We continue to execute our strategy to meet our long-term
financial goals,” said William F. Austen, Bemis Company's President
and Chief Executive Officer. “In our U.S. business, our asset
recapitalization program continues to enhance margins and volumes.
This quarter, U.S. margins again increased, with the slope of
improvement slightly muted due to mix of business. As we move into
the third quarter, we expect innovation and our asset
recapitalization program to continue to deliver margin
improvement.” Austen continued, “In our global business, we made
progress this quarter. In Latin America, we improved profits
sequentially related to the operational inefficiencies we
experienced in the first quarter. In our healthcare business, we
continue to work through the ramp-up of our newly hired workforce
at our expanded Oshkosh facility; we anticipate the profit benefits
from this investment to begin during the fourth quarter. I remain
confident in our people, our strategy, and our drive to deliver
long-term value to shareholders.”
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $671.0 million for the second
quarter of 2016 represented a decrease of 3.4 percent compared to
the same period of 2015. Compared to prior year, unit volumes were
up approximately one percent during the second quarter. The
decrease in net sales was driven by the contractual pass through of
lower raw material costs as well as the mix of products sold.
U.S. Packaging operating profit increased to $103.5 million in
the second quarter of 2016, or 15.4 percent of net sales, compared
to $102.9 million, or 14.8 percent of net sales, in 2015. This
margin increase reflects operational improvements attributable to
manufacturing efficiencies from the Company’s asset
recapitalization program, partially offset by the impact of lower
sales mix of products sold during the quarter.
Global Packaging
Global Packaging net sales for the second quarter of 2016 of
$350.3 million represent an increase of 4.4 percent compared to the
same period of 2015. Currency translation reduced net sales by 12.6
percent, primarily due to currencies in Latin America. Acquisitions
increased net sales by 7.7 percent. Excluding the impact of
currency translation and the acquisition, net sales increased by
9.3 percent, reflecting increased unit volumes of approximately one
percent, along with increased sales price and mix.
Global Packaging operating profit for the second quarter was
$8.5 million, compared to $27.0 million for the same period in
2015. Excluding restructuring and acquisition-related costs,
segment adjusted operating profit would have been $28.1 million, or
8.0 percent of net sales, which compares to 8.1 percent of net
sales in 2015. (See attached schedule: “Reconciliation of Non-GAAP
Operating Profit.”) The net impact of currency translation reduced
operating profit during the second quarter of 2016 by $2.6 million
as compared to the same period in 2015, primarily due to currencies
in Latin America. Operating profit during the quarter also reflects
the impact of positive sales mix and volume, partially offset by
continued operational inefficiencies at one of the Company's
healthcare packaging facilities.
RESTRUCTURING
During the second quarter of 2016, Bemis initiated a
restructuring program in its Global Packaging segment to improve
efficiencies and reduce fixed costs. The Company will close four
facilities in Latin America by the middle of 2017. A portion of
these closures reflect the Company’s synergy plan related to the
recent Emplal acquisition to optimize its footprint. Total
restructuring costs for this program are estimated to be in the
range of $28 to $30 million (at current exchange rates), $13.3
million of which was booked during the second quarter of 2016. Cost
reductions from the program are expected to reach the full run rate
of approximately $16 million (at current exchange rates) annually
during 2018.
William F. Austen said, “Our decision to consolidate facilities
in Latin America reflects our desire to be good stewards of our
expanded resources. The modern and efficient facilities we acquired
with the Emplal acquisition provide the capacity that allows us to
move some production from our legacy locations. As the economic
environment in Latin America continues to challenge consumers, as
well as our customers in the region, the benefits of this
consolidation will help offset those headwinds and will keep us on
track in achieving our long-term margin targets in the Global
Packaging segment.”
CASH FLOW AND CAPITAL STRUCTURE
Cash flow from operations for the six months ended June 30,
2016 was $153.0 million, compared to $218.5 million in the prior
year.
Total company net debt to adjusted EBITDA was 2.6 times at
June 30, 2016 reflecting the impact of recent acquisitions.
Net debt is defined as total debt less cash, and adjusted EBITDA is
defined as the last twelve months total company adjusted operating
income plus depreciation and amortization.
Capital expenditures totaled $77.9 million for the six months
ended June 30, 2016, reflecting continued investment in new
capacity to support growth initiatives and productivity
improvements.
2016 OUTLOOK
Management confirmed full year adjusted earnings per share to be
in the range of $2.68 to $2.78 ($2.47 to $2.57 on a GAAP basis,
which considers expected restructuring charges during the balance
of the year).
Management reduced cash from operations guidance to be in the
range of $425 to $465 million, as compared to the previous range of
$450 to $500 million. This updated guidance reflects the impact of
the restructuring program and the timing of working capital
improvement initiatives.
Management continues to expect capital expenditures to be
approximately $200 million.
PRESENTATION OF NON-GAAP INFORMATION
This press release refers to non-GAAP financial measures:
adjusted operating profit, adjusted operating profit as a
percentage of net sales, net debt to adjusted EBITDA, adjusted
return on invested capital, and adjusted diluted earnings per
share. These non-GAAP financial measures adjust for factors that
are unusual or unpredictable. These measures exclude the impact of
certain amounts related to facility consolidation and plant closure
activities, including employee-related costs, equipment relocation
costs, accelerated depreciation, and the write-down of equipment.
These measures also exclude gains or losses on sales of significant
property and divestitures, certain litigation matters, and certain
acquisition-related expenses, including transaction expenses, due
diligence expenses, professional and legal fees, purchase
accounting adjustments for inventory and order backlog, and changes
in fair value of deferred acquisition payments. This adjusted
information should not be construed as an alternative to results
determined in accordance with accounting principles generally
accepted in the United States of America (GAAP). It is provided
solely to assist in an investor's understanding of the impact of
these items on the comparability of the Company's ongoing business
operations.
FORWARD-LOOKING STATEMENTS
Statements in this release that are not historical, including
statements relating to the expected future performance of the
Company, are considered “forward-looking,” and are presented
pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. Such content is subject to certain risks and
uncertainties, including but not limited to general 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 second 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 Ended June 30, Six
Months Ended June 30, 2016 2015
2016 2015 Net sales $ 1,021.3 $ 1,030.3 $
1,989.2 $ 2,070.4 Cost of products sold 804.3
809.1 1,563.4 1,631.7 Gross
profit 217.0 221.2 425.8 438.7 Operating expenses: Selling,
general and administrative expenses 100.4 103.9 199.8 210.3
Research and development 11.6 11.5 23.1 22.8 Restructuring and
acquisition-related costs 19.6 0.3 20.4 5.3 Other operating income
(3.6 ) (3.7 ) (5.9 ) (6.3 )
Operating income 89.0 109.2 188.4 206.6 Interest expense
14.0 12.8 29.4 25.9 Other non-operating income (0.6 )
(2.2 ) (0.5 ) (4.0 ) Income from continuing
operations before income taxes 75.6 98.6 159.5 184.7
Provision for income taxes 24.7 33.0
52.4 62.1 Income from continuing
operations 50.9 65.6 107.1 122.6 Loss from discontinued
operations — — —
(2.6 ) Net income $ 50.9 $ 65.6 $ 107.1
$ 120.0
Basic earnings per share: Income from
continuing operations $ 0.54 $ 0.68 $ 1.13 $ 1.26 Loss from
discontinued operations — — —
(0.03 ) Net income $ 0.54 $ 0.68 $ 1.13
$ 1.23
Diluted earnings per share:
Income from continuing operations $ 0.53 $ 0.67 $ 1.12 $ 1.25 Loss
from discontinued operations — —
— (0.03 ) Net income $ 0.53 $ 0.67 $
1.12 $ 1.22 Cash dividends paid per share $
0.29 $ 0.28 $ 0.58 $ 0.56
Weighted average shares outstanding (including participating
securities): Basic 94.7 96.9 94.8 97.3 Diluted 95.7 98.1 95.8 98.4
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions)
(unaudited)
June
30,
December 31, 2016 2015
ASSETS
Cash and cash equivalents $ 61.8 $ 59.2 Trade receivables
521.5 451.3 Inventories 551.0 525.9 Prepaid expenses and other
current assets 84.7 82.6 Total current
assets 1,219.0 1,119.0 Property
and equipment, net 1,258.1 1,206.3
Goodwill 1,039.5 949.5 Other intangible assets, net 166.2
149.8 Deferred charges and other assets 84.5
65.2 Total other long-term assets 1,290.2
1,164.5
TOTAL ASSETS $ 3,767.3 $
3,489.8
LIABILITIES
Current portion of long-term debt $ 1.3 $ 5.8 Short-term
borrowings 20.4 29.6 Accounts payable 379.1 334.8 Employee-related
liabilities 71.0 93.3 Accrued income and other taxes 41.3 35.2
Other current liabilities 74.4 90.4
Total current liabilities 587.5 589.1
Long-term debt, less current portion 1,532.3 1,353.9
Deferred taxes 188.4 172.4 Other liabilities and deferred credits
161.7 167.0
TOTAL
LIABILITIES 2,469.9 2,282.4
EQUITY
Common stock issued (128.8 and 128.2 shares, respectively)
12.9 12.8 Capital in excess of par value 572.2 573.2 Retained
earnings 2,267.5 2,216.0 Accumulated other comprehensive loss
(426.2 ) (509.9 ) Common stock held in treasury (34.1 and 33.1
shares at cost, respectively) (1,129.0 ) (1,084.7 )
TOTAL EQUITY 1,297.4 1,207.4
TOTAL LIABILITIES AND EQUITY $ 3,767.3
$ 3,489.8
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended June 30, 2016
2015
Cash flows from
operating activities
Net income $ 107.1 $ 120.0 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 81.3 80.1 Excess tax benefit from share-based payment
arrangements (4.3 ) (0.5 ) Share-based compensation 9.4 9.5
Deferred income taxes 8.3 (0.9 ) Income of unconsolidated
affiliated company (0.9 ) (0.9 ) Non-cash impairment charge of
discontinued operations — 3.2 Loss (gain) on sale of property and
equipment 1.7 (3.6 ) Changes in working capital, excluding effect
of acquisitions, divestitures and currency (62.1 ) 10.1 Changes in
other assets and liabilities 12.5 1.5
Net cash provided by operating
activities
153.0 218.5
Cash flows from
investing activities
Additions to property and equipment (77.9 ) (96.3 ) Business
acquisitions and adjustments, net of cash acquired (107.3 ) —
Proceeds from sale of property and equipment 0.2 7.4 Proceeds from
divestitures — 13.6 Net cash
used in investing activities (185.0 ) (75.3 )
Cash flows from
financing activities
Proceeds from issuance of long-term debt 0.2 2.0 Repayment of
long-term debt (23.7 ) — Net borrowing of commercial paper 174.2
43.5 Net repayment of short-term debt (3.7 ) (0.5 ) Cash dividends
paid to shareholders (59.6 ) (55.2 ) Common stock purchased for the
treasury (44.3 ) (83.4 ) Deferred payments for business
acquisitions — (4.4 ) Excess tax benefit from share-based payment
arrangements 4.3 0.5 Stock incentive programs and related tax
withholdings (14.6 ) (2.7 ) Net cash provided
by (used in) financing activities 32.8 (100.2
) Effect of exchange rates on cash and cash equivalents
1.8 (2.3 ) Net increase in cash and
cash equivalents 2.6 40.7 Cash and cash equivalents balance
at beginning of year 59.2 47.1
Cash and cash equivalents balance at end of period $ 61.8 $
87.8
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30, 2016 2015
2016 2015 U.S. Packaging operating
profit $ 103.5 $ 102.9 $ 205.2 $ 198.3
Global
Packaging: Operating profit before restructuring and
acquisition-related costs 28.1 27.3 44.4 56.6 Restructuring and
acquisition-related costs (19.6 ) (0.3 ) (20.2
) (5.3 ) Operating profit 8.5 27.0 24.2 51.3 General
corporate expenses (23.0 ) (20.7 ) (41.0 )
(43.0 )
Operating income 89.0 109.2 188.4
206.6 Interest expense 14.0 12.8 29.4 25.9 Other
non-operating income (0.6 ) (2.2 ) (0.5 )
(4.0 )
Income from continuing operations before
income taxes $ 75.6 $ 98.6 $ 159.5 $ 184.7
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions)
(unaudited)
Three Months Ended June 30,
Six Months Ended June
30,
2016 2015 2016 2015
U.S. Packaging Net sales $ 671.0 $ 694.7 $
1,331.5 $ 1,401.7 Operating profit as reported
$ 103.5 $ 102.9 $ 205.2 $ 198.3
Operating profit return on sales As reported 15.4 % 14.8 % 15.4 %
14.1 %
Global Packaging Net sales $ 350.3 $
335.6 $ 657.7 $ 668.7 Operating profit
as reported $ 8.5 $ 27.0 $ 24.2 $ 51.3 Non-GAAP adjustments:
Restructuring costs (1) 13.3 0.3 13.3 5.3 Acquisition-related costs
(2) 6.3 — 6.9 —
Operating profit as adjusted $ 28.1 $ 27.3
$ 44.4 $ 56.6 Operating profit return
on sales As reported 2.4 % 8.0 % 3.7 % 7.7 % As adjusted 8.0 % 8.1
% 6.8 % 8.5 % (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 Ended June
30, Six Months Ended June 30, 2016
2015 2016 2015 Continuing
Operations Diluted earnings per share, as reported $ 0.53 $
0.67 $ 1.12 $ 1.25 Non-GAAP adjustments per share, net of
taxes: Restructuring costs (1) 0.09 — 0.09 0.03 Acquisition-related
costs (2) 0.05 — 0.06 — Diluted
earnings per share, as adjusted $ 0.67 $ 0.67 $ 1.27 $ 1.28 (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
(in millions)
(unaudited)
Quarter Ended
12 months endedJune 30,
2016
June 30,2016
March 31,2016
December 31,2015
September 30,2015
Income from Continuing Operations Operating income (EBIT) $
89.0 $ 99.4 $ 97.2 $ 105.8 $ 391.4 Restructuring and
acquisition-related costs 19.6 0.8 2.2
4.6 27.2
Adjusted EBIT (Bemis
Company Inc.) (a) $ 108.6 $ 100.2 $ 99.4 $ 110.4
$ 418.6
Average Invested Capital1
(b) 2,613.7
Assumed tax rate2 (c) 35.0
%
Adjusted ROIC (a * (1 - c) / b) 10.4 %
Quarter
Ended
12 months endedJune 30,
2015
June 30,2015
March 31,2015
December 31,2014
September 30,2014
Income from Continuing Operations Operating Income (EBIT) $
109.2 $ 97.4 $ 98.5 $ 107.3 $ 412.4 Restructuring and
acquisition-related costs 0.3 5.0 —
— 5.3
Adjusted EBIT (Continuing
Operations) 109.5 102.4 98.5 107.3 417.7
(Loss)
Income from Discontinued Operations — (2.6 ) 1.9 (44.5 ) (45.2
) Income taxes — (1.1 ) 0.8 9.6 9.3 Other non-operating expense
(income) — — — 0.1
0.1
Discontinued Operations EBIT — (3.7 ) 2.7 (34.8 )
(35.8 ) Discontinued operations impairment and plant closure
— 3.7 — 43.9 47.6
Adjusted EBIT (Discontinued Operations) — — 2.7 9.1 11.8
Adjusted EBIT (Bemis Company
Inc.) (a) $ 109.5 $ 102.4 $ 101.2 $ 116.4 $ 429.5
Average Invested Capital1 (b)
2,795.5
Assumed tax rate2 (c) 35.0 %
Adjusted ROIC (a * (1 - c) / b) 10.0 % 1 - Average invested
capital includes all equity and debt amounts, less cash calculated
on a five-quarter average. 2 - Tax rate assumed to be the U.S.
federal statutory rate.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728005535/en/
Bemis Company Inc.Erin M. Winters,
920-527-5288Director of Investor Relations
Bemis (NYSE:BMS)
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