Bemis Company Inc.
) reported second quarter 2012 adjusted earnings of 54 cents per
share, up 6% from the 51 cents in the year-ago quarter. The result
surpassed the Zacks Consensus Estimate of 52 cents and was at the
mid-point of 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 2 cents related to acquisitions and a charge
of 12 cents pertaining to a facility consolidation activity in the
reported quarter, EPS stood at 40 cents, down 22% from 51 cents in
the year-ago quarter.
Net sales slid 4.2% year over year to $1.3 billion, in line with
the Zacks Consensus Estimate. Acquisitions completed during the
second half of 2011 had a positive impact of 1.5% but were offset
by lower unit volume in the flexible packaging business segment and
unfavorable currency translation.
Cost of products sold decreased 4.7% to $1.08 billion in the
quarter. Gross profit declined 1.9% to $233 million. Selling,
general and administrative expenses decreased 2% to $124 million.
Adjusted operating income declined 2% to $99 million.
Net sales from the Flexible Packaging segment amounted to $1.17
billion, down 4% year over year. Lower unit sales volumes and an
unfavorable impact of currency translation of 4.8% mitigated the
1.7% benefit from acquisitions completed in the second half of
fiscal 2011 and higher selling prices and improved sales mix.
However, adjusted segment operating profit increased 1.2% to
$117.7 million from $116.3 million, thanks to benefits from cost
reductions that somewhat offset the negative impact of lower unit
Net sales from the Pressure Sensitive Materials segment totaled
$141.9 million, a decline of 6.3% from the year-ago quarter, due to
lower volume as well as negative impact from currency translation
of 5%. Segment operating profit was $10.9 million, a 7.6% drop from
$11.8 million recorded a year ago due to the negative impact of
As of June 30, 2012, Bemis had cash and cash equivalents of $113
million, up from $113 million as of March 31, 2012. Total debt of
the company reduced marginally to $1.55 billion as of June 30,2012
compared with $1.57 billion as of March 31. 2012. The
debt-to-capitalization ratio increased to 49.8% as of June 30, 2012
from 48.8% as of March 31, 2012..
Total cash flow from operating activities for the first half of
fiscal 2012 increased to $143.3 million from $81.9 million in the
first half of fiscal 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.
Management expects adjusted EPS in the range of 51 cents to 57
cents for the third quarter of 2012. For 2012, EPS guidance has
been lowered to a range of $2.00 and $2.10 due to lower volume
expectation and weaker foreign currency exchange rates.
Capital expenditures are estimated at around $150 million, down
from the prior projection of $175 million. The guidance includes
expansion of Bemis' capacity in China, the addition of high barrier
capacity in Brazil and added capacity in order to support increased
customer demand for products from Bemis' barrier platform in North
Weak volume, higher pension expense, a weakening European economic
outlook remain major causes of concern. Bemis has expanded its
facility consolidation program, which is now expected to result in
$50 million of savings annually.
Furthermore, a favorable raw material cost environment will
somewhat lessen the negative effects of lower volume levels in
2012. Once volumes improve, Bemis' relentless efforts for cutting
costs will bear fruit. Shares of Bemis currently retain a Zacks #3
Rank (short-term Hold rating).
AVERY DENNISON (AVY): Free Stock Analysis
BEMIS (BMS): Free Stock Analysis Report
SEALED AIR CORP (SEE): Free Stock Analysis
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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
Avery Dennison Corporation