Bemis Company Inc.
(
BMS
) reported third quarter 2012 adjusted earnings of 60 cents per
share, up 7% from the 56 cents in the year-ago quarter. The
result surpassed the Zacks Consensus Estimate of 54 cents and was
above the management's EPS guidance in the range of 51 cents - 57
cents. Decline in overall unit volumes affected the company's
financial performance during the quarter.
Including charges of 1 cent related to acquisitions and a
charge of 14 cents pertaining to a facility consolidation
activity in the reported quarter, EPS stood at 45 cents, down 15%
from 53 cents in the year-ago quarter.
Net sales slid 5% year over year to $1.29 billion, falling
short of the Zacks Consensus Estimate of $1.32 billion.
Acquisitions had a positive impact of 1.1% but were offset by
lower unit volume in the flexible packaging business segment and
unfavorable currency translation.
Cost of products sold decreased 8% to $1.04 billion in the
quarter. Gross profit increased 10.5% to $247 million. Selling,
general and administrative expenses increased 15% to $128
million. Adjusted operating income increased 7% to $108
million.
Segment Performance
Net sales from the Flexible Packaging segment amounted to
$1.15 billion, down 5% year over year. Lower unit sales volumes
and an unfavorable impact of currency translation of 4.7%
mitigated the 1.3% benefit from acquisitions, higher selling
prices and improved sales mix. However, adjusted segment
operating profit increased 11.5% to $132.8 million from $119.1
million.
Net sales from the Pressure Sensitive Materials segment
totaled $135.4 million, a decline of 4.5% from the year-ago
quarter, due to negative impact from currency translation of
4.3%. Segment operating profit was $7.7 million, a 3.8% drop from
$8 million recorded a year ago due to the negative impact of
currency translation.
Financial Update
As of September 30, 2012, Bemis had cash and cash equivalents
of $123 million, up from $113 million as of June 30, 2012. Total
debt of the company reduced marginally to $1.50 billion as of
September 30, 2012 compared with $1.55 billion as of June 30,
2012. The debt-to-capitalization ratio decreased to 48.1% as of
September 30, 2012 from 49.8% as of June 30, 2012
Total cash flow from operating activities for the first nine
months of fiscal 2012 increased to $290.2 million from $250.5
million in the comparable period of 2011. The company plans to
utilize its cash flow to reduce its debt burden with a target to
reduce the ratio of net debt to adjusted EBITDA to approximately
2.0 times. During the quarter of 2012, Bemis acquired two small
flexible packaging distributors for the Australian market for
$19.1 million.
2012 Outlook
Management expects adjusted EPS in the range of 47 cents to 52
cents for the fourth quarter of 2012. For 2012, EPS guidance has
been increased to a range of $2.10 to $2.15 from the previous
guidance of $2.00 to $2.10 due to stronger third quarter
earnings. Capital expenditures are estimated at around $150
million for 2012.
Our Take
Weak volume, cautious consumer spending environment, weakening
European economic outlook and rising food costs remain major
causes of concern. However, savings from the Bemis cost reduction
program due to the closure of unproductive facilities will help
offset these pressures. In addition, moderation in resin costs
should help stabilize margins. Shares of Bemis currently retain a
Zacks #2 Rank (short-term Buy rating).
Neenah, Wisconsin-based Bemis Company is a major supplier of
flexible packaging and pressure sensitive materials used by
leading food, consumer products, healthcare and other companies
worldwide. Bemis competes with the likes of
Sealed Air Corporation
(
SEE
) and
Avery Dennison Corporation
(
AVY
).
AVERY DENNISON (AVY): Free Stock Analysis
Report
BEMIS (BMS): Free Stock Analysis Report
SEALED AIR CORP (SEE): Free Stock Analysis
Report
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