HIGHLIGHTS:
- Quarterly EPS increased to a record
$0.65 per share, near the top end of management’s guidance.
- Adjusted diluted earnings per share for
the second quarter of $0.65 increased 6.6 percent compared to the
prior second quarter.
- Gross profit as a percentage of net
sales improved to 19.8 percent in the second quarter compared to
19.4 percent in the prior second quarter.
- The U.S. Packaging segment, which
represents approximately 60 percent of total Bemis revenue,
increased adjusted operating profit as a percentage of net sales to
13.9 percent compared to 13.0 percent in the prior second
quarter.
- Bemis repurchased one million shares of
its common stock during the second quarter at a cost of $40.9
million.
- Management established adjusted diluted
earnings guidance for the third quarter of 2014 in the range of
$0.65 to $0.70 per share.
- Management raised the lower end of
total year 2014 earnings guidance from the range of $2.40 to $2.55
per share to the range of $2.45 to $2.55 per share.
Bemis Company, Inc. (NYSE:BMS) today reported record second
quarter 2014 diluted earnings of $0.65 per share, compared to $0.51
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 second
quarter of 2013 would have been $0.61. Net sales for the second
quarter of 2014 totaled $1.2 billion. Excluding the impact of
currency, acquisitions, and divestitures, net sales were consistent
with the second quarter of 2013.
“I am very pleased with our strong operating performance during
the second quarter,” said Henry Theisen, Bemis Company’s Chairman
and Chief Executive Officer. “We achieved our highest gross margin
since 2009 as a result of our continued pricing discipline and
improved sales mix. Our new product innovations have created
positive momentum to support continued performance improvement
through the second half of 2014.”
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $725.8 million for the second
quarter of 2014 represented a decrease of 7.1 percent compared to
the same period of 2013. The divestitures of the Clysar business in
2013 and the Paper Packaging Division in 2014 reduced sales by 6.6
percent. The remaining 0.5 percent decrease in net sales primarily
reflects lower volumes in less differentiated product
categories.
U.S. Packaging operating profit for the second quarter of 2014
was $101.0 million, or 13.9 percent of net sales, compared to $80.3
million, or 10.3 percent of net sales, in the same period of 2013.
Excluding facility consolidation costs in 2013, segment adjusted
operating profit would have been $101.5 million, or 13.0 percent of
net sales. (See attached schedule: “Reconciliation of Non-GAAP
Operating Profit”.) This margin improvement reflects the higher
proportion of value-added products sold during the quarter.
Global Packaging
Global Packaging net sales for the second quarter of 2014 of
$371.8 million represented a decrease of 0.7 percent compared to
the second quarter of 2013. Currency translation decreased net
sales by 5.8 percent, primarily driven by the Brazilian Real. The
2013 acquisition of our extrusion platform in Foshan, China
increased net sales by 5.2 percent. Excluding the impact of
currency translation and the acquisition, Global Packaging net
sales were consistent with the prior year. Increased unit sales of
healthcare packaging were partially offset by the impact of
generally lower consumption levels in South America.
Global Packaging operating profit for the second quarter was
$26.6 million, or 7.2 percent of net sales, compared to $27.4
million, or 7.3 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 $27.1 million, or 7.2 percent of net sales
in 2013. The net effect of currency translation decreased operating
profit during the second quarter of 2014 by $1.7 million. The
benefit of higher unit sales of value-added healthcare packaging
was offset by the impact of generally lower unit sales of food
packaging.
Pressure Sensitive Materials
Pressure Sensitive Materials net sales totaled $144.0 million
for the second quarter, a 1.6 percent increase from the same period
in 2013. Currency translation increased net sales by 2.0 percent
compared to the prior year. The remaining modest decrease in net
sales reflects lower unit sales of roll label and technical
products offset by higher sales of value-added graphics
products.
Pressure Sensitive Materials operating profit for the second
quarter was $9.8 million, or 6.8 percent of net sales, compared to
$6.0 million, or 4.2 percent of net sales in 2013. The increase in
adjusted operating profit during the period reflects improved
global production efficiencies and cost control as well as the
strengthening demand in Europe for value-added graphic products
sold for advertising and promotional applications.
CAPITAL STRUCTURE AND CASH FLOW
Net debt to adjusted EBITDA was 2.2 times at June 30, 2014,
slightly above our target ratio of 2.0 times. 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 for the quarter of $57.9 million
compared to $94.0 million for second quarter of 2013, reflecting
the cash payments associated with the closure of one Pressure
Sensitive Materials plant and generally higher working capital
levels.
On August 1, 2014, public notes totaling $400 million are
scheduled to mature. Management plans to refinance these notes with
a $200 million bank term loan which matures in 2022 and $200
million of commercial paper.
2014 OUTLOOK
Management expects adjusted diluted earnings per share for the
third quarter of 2014 to be in the range of $0.65 to $0.70
reflecting continued improvement in operating performance and sales
mix.
Management raised the lower end of total year 2014 earnings
guidance from the range of $2.40 to $2.55 per share to the range of
$2.45 to $2.55 per share. This includes an anticipated effective
income tax rate for 2014 of approximately 34.5 percent.
Management expects cash flow from operations for 2014 to be
approximately $450 million. This revised expectation reflects cash
expenses associated with the May 2014 closure of a manufacturing
plant in Stow, Ohio and tax payments related to the gain on the
sale of the Paper Packaging division.
Management expects its total year 2014 capital expenditures to
be approximately $175 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, 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, lease
termination payments, accelerated depreciation, and the write-down
of equipment. These measures also exclude gains on sales of
property and divestitures and certain acquisition-related expenses
including transaction expenses, due diligence expenses,
professional and legal fees, purchase accounting adjustments for
inventory and order backlog, integration expenses, the cash portion
of any acquisition earn-out payments recorded as compensation
expenses, 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 economic
conditions, future changes in cost or availability of raw
materials, our ability to adjust selling prices, consumer buying
patterns, changes in customer order patterns, the results of
competitive bid processes, costs associated with the pursuit of
business combinations or divestitures, plant closures, a failure in
our information technology infrastructure or applications, the
funded status of our defined benefit plans, foreign currency
fluctuations, unexpected costs associated with production
relocation, changes in working capital requirements, changes in
government regulations, and the availability and related cost of
financing from banks and capital markets. 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, 2013.
INVESTOR CONFERENCE CALL
Bemis Company, Inc. will webcast an investor telephone
conference regarding its second quarter 2014 financial results this
morning at 10 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.
ABOUT BEMIS COMPANY, INC.
Bemis Company, Inc. is a major supplier of packaging and
pressure sensitive materials used by leading food, consumer
products, healthcare, and other companies worldwide. Founded in
1858, Bemis Company is included in the S&P 500 index of stocks
and reported 2013 net sales of $5.0 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 19,000 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, 2014 2013
2014 2013 Net sales $ 1,241.6 $ 1,297.1 $
2,479.4 $ 2,552.1 Cost of products sold 995.9 1,045.3
2,019.1 2,058.5 Gross profit 245.7 251.8 460.3 493.6
Operating expenses: Selling, general and administrative expenses
119.8 132.1 242.5 262.7 Research and development 12.6 11.7 25.7
23.0 Facility consolidation and other costs — 20.9 —
30.2
Other operating income (2.5 ) (3.2 ) (2.9 ) (4.7 Operating
income 115.8 90.3 195.0 182.4 Interest expense 17.0 17.0
33.9 33.6 Other non-operating income (1.5 ) (7.2 ) (14.1 ) (3.1
Income before income taxes 100.3 80.5 175.2 151.9
Provision for income taxes 34.5 27.4 60.2 49.5
Net income $ 65.8 $ 53.1 $ 115.0 $
102.4 Basic earnings per share $ 0.66 $ 0.51 $
1.14 $ 0.99 Diluted earnings per share $ 0.65
$ 0.51 $ 1.13 $ 0.98 Cash dividends paid per
share $ 0.27 $ 0.26 $ 0.54 $ 0.52
Weighted average shares outstanding (including participating
securities): Basic 100.4 103.0 101.0 103.2 Diluted 101.4 104.0
101.9 104.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
(in millions) (unaudited)
June 30, 2014
December 31,2013
ASSETS
Cash and cash equivalents $ 127.2 $ 141.7 Accounts
receivable, net 669.5 615.4 Inventories 684.1 648.5 Prepaid
expenses and other current assets 113.6 98.9 Total
current assets 1,594.4 1,504.5 Property and
equipment, net 1,236.4 1,284.3 Goodwill
1,051.6 1,052.2 Other intangible assets, net 184.1 190.6 Deferred
charges and other assets 86.5 78.6 Total other
long-term assets 1,322.2 1,321.4
TOTAL
ASSETS $ 4,153.0 $ 4,110.2
LIABILITIES
Current portion of long-term debt $ — $ 0.2 Short-term
borrowings 15.9 14.7 Accounts payable 390.6 362.8 Accrued salaries
and wages 96.4 99.6 Accrued income and other taxes 31.1 32.3 Other
current liabilities 81.9 92.3 Total current
liabilities 615.9 601.9 Long-term debt, less current portion
1,465.1 1,421.4 Deferred taxes 256.4 269.8 Other liabilities and
deferred credits 120.3 132.3
TOTAL
LIABILITIES 2,457.7 2,425.4
EQUITY
Common stock issued (128.0 and 127.9 shares, respectively)
12.8 12.8 Capital in excess of par value 555.1 548.1 Retained
earnings 2,065.0 2,005.1 Accumulated other comprehensive loss (71.0
) (98.7 ) Common stock held in treasury (28.1 and 26.0 shares at
cost, respectively) (866.6 ) (782.5 )
TOTAL EQUITY
1,695.3 1,684.8
TOTAL LIABILITIES AND
EQUITY $ 4,153.0 $ 4,110.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended June 30, 2014
2013
Cash flows from
operating activities
Net income $ 115.0 $ 102.4 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 94.8 97.0 Excess tax benefit from share-based payment
arrangements (0.6 ) — Share-based compensation 7.9 10.6 Deferred
income taxes (14.2 ) 9.3 Income of unconsolidated affiliated
company (0.6 ) (1.5 ) (Gain) loss on sale of property and equipment
(0.4 ) 0.2 Net facility consolidation and other costs — 2.9 Gain on
divestitures (9.4 ) (5.9 ) Changes in working capital, excluding
effect of acquisitions, divestitures and currency (116.6 ) (77.8 )
Changes in other assets and liabilities (5.5 ) (34.8 ) Net
cash provided by operating activities 70.4 102.4
Cash flows from
investing activities
Additions to property and equipment (69.3 ) (54.5 ) Business
acquisitions and adjustments, net of cash acquired — 0.2 Proceeds
from sale of property and equipment 7.8 5.5 Proceeds from
divestitures 79.8 30.4 Net cash provided by
(used in) investing activities 18.3 (18.4 )
Cash flows from
financing activities
Repayment of long-term debt (0.2 ) — Net borrowing of commercial
paper 32.5 60.7 Net borrowing (repayment) of short-term debt 5.3
(1.0 ) Cash dividends paid to shareholders (54.6 ) (54.0 ) Common
stock purchased for the treasury (84.1 ) (35.6 ) Deferred payments
for business acquisitions (6.6 ) — Excess tax benefit from
share-based payment arrangements 0.6 —
Stock incentive programs and related tax
withholdings
(1.5 ) (12.7 ) Net cash used in financing activities (108.6
) (42.6 ) Effect of exchange rates on cash and cash
equivalents 5.4 (5.3 ) Net (decrease) increase in
cash and cash equivalents (14.5 ) 36.1 Cash and cash
equivalents balance at beginning of year 141.7 114.1
Cash and cash equivalents balance at end of period $ 127.2
$ 150.2
BEMIS COMPANY,
INC. AND SUBSIDIARIES
OPERATING PROFIT
AND PRETAX PROFIT
(in millions)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30, 2014 2013
2014 2013 U.S. Packaging Operating
profit before facility consolidation and other costs $ 101.0 $
101.5 $ 192.8 $ 196.9 Facility consolidation and other costs —
(21.2 ) — (30.6 ) Operating profit 101.0 80.3 192.8
166.3
Global Packaging Operating profit before
facility consolidation and other costs 26.6 27.1 50.7 52.9 Facility
consolidation and other costs — 0.3 — 0.4
Operating profit 26.6 27.4 50.7 53.3
Pressure
Sensitive Materials Operating profit (loss) 9.8 6.0
(4.7 ) 13.7 Segment operating profit 137.4
113.7 238.8 233.3
Corporate General corporate
expenses (21.6 ) (23.4 ) (43.8 ) (50.9 ) Operating income
115.8 90.3 195.0 182.4 Interest expense 17.0 17.0 33.9 33.6
Other non-operating income (1.5 ) (7.2 ) (14.1 ) (3.1 )
Income before income taxes $ 100.3 $ 80.5
$ 175.2 $ 151.9
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP OPERATING PROFIT
(in millions, except per share
amounts)
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30, 2014 2013
2014 2013 U.S. Packaging Net sales $
725.8 $ 780.9 $ 1,464.0 $ 1,526.9
Operating profit as reported $ 101.0 $ 80.3 $ 192.8 $ 166.3
Non-GAAP adjustments: Facility consolidation and other costs
(1) — 21.2 — 30.6 Operating
profit as adjusted $ 101.0 $ 101.5 $ 192.8 $
196.9 Operating profit as a percentage of net sales
As reported 13.9 % 10.3 % 13.2 % 10.9 % As adjusted 13.9 % 13.0 %
13.2 % 12.9 %
Global Packaging Net sales $ 371.8
$ 374.4 $ 728.6 $ 742.9
Operating profit as reported $ 26.6 $ 27.4 $ 50.7 $ 53.3
Non-GAAP adjustments: Facility consolidation and other costs (1) —
(0.3 ) — (0.4 ) Acquisition-related integration costs (2) —
— — (0.5 ) Operating profit as adjusted $ 26.6
$ 27.1 $ 50.7 $ 52.4 Operating
profit as a percentage of net sales As reported 7.2 % 7.3 % 7.0 %
7.2 % As adjusted 7.2 % 7.2 % 7.0 % 7.1 %
Pressure
Sensitive Materials Net sales $ 144.0 $ 141.8 $
286.8 $ 282.3 Operating profit (loss) as
reported $ 9.8 $ 6.0 $ (4.7 ) $ 13.7 Non-GAAP adjustments:
Plant closure (3) — — 25.0 —
Operating profit as adjusted $ 9.8 $ 6.0 20.3
13.7 Operating profit (loss) as a percentage of net
sales As reported 6.8 % 4.2 % (1.6 )% 4.9 % As adjusted 6.8 % 4.2 %
7.1 % 4.9 % (1) Facility consolidation and other
costs includes employee-related costs, accelerated depreciation,
write down of equipment and other costs related to the Company's
facility consolidation program. (2) Acquisition related integration
costs include earnout payments treated as compensation expense
related to the Mayor Packaging acquisition. (3) Includes
employee-related costs (including a multiemployer plan settlement),
accelerated depreciation, and other costs related to closing our
plant in Stow, Ohio (a Pressure Sensitive Materials manufacturing
facility).
BEMIS COMPANY,
INC. AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP EARNINGS PER SHARE
(unaudited)
Three Months Ended June 30, Six Months
Ended June 30, 2014 2013 2014
2013 Diluted earnings per share, as reported $ 0.65 $
0.51 $ 1.13 $ 0.98 Non-GAAP adjustments per share, net of
taxes: Facility consolidation and other costs (1) — 0.13 — 0.19
Pressure Sensitive Materials plant closure (2) — — 0.16 — Gain on
divestitures (3) — (0.03 ) (0.06 ) (0.03 ) Diluted
earnings per share, as adjusted $ 0.65 $ 0.61 $ 1.23
$ 1.14 (1) Facility consolidation and
other costs includes employee-related costs, accelerated
depreciation, write down of equipment and other costs related to
the Company's facility consolidation program. (2) Includes
employee-related costs (including a multiemployer plan settlement),
accelerated depreciation, and other costs related to closing our
plant in Stow, Ohio (a Pressure Sensitive Materials manufacturing
facility). (3) Gain on divestitures relates to the sale of the
Paper Packaging Division in 2014 and Clysar in 2013.
Bemis Company Inc.Erin M. Winters,
920-527-5288Director, Investor Relations
Bemis (NYSE:BMS)
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