Bemis Company, Inc.
) reported third-quarter 2013 adjusted earnings of 60 cents per
share, in line with the Zacks Consensus Estimate and the year-ago
quarter. Earnings were at the midpoint of management's guidance
range of 57 cents - 63 cents per share.
Including facility consolidation and acquisition-related
integration charges and gain on sale of land and building,
earnings per share in the reported quarter stood at 52 cents, up
15.6% from 45 cents in the year-ago quarter. The prior-year
quarter earnings included facility consolidation and gain on the
divestiture of Clysar and gain on the sale of land and building.
Net sales slid 2.3% year over year to $1.258 billion, short of
the Zacks Consensus Estimate of $1.29 billion. Negative impact of
currency translation and the reduction of certain low margin
sales related to the facility consolidation program offset the
net benefit of improved price mix over generally lower unit sales
Cost of products sold decreased 2.8% to $1.011 billion in the
quarter. Gross profit remained flat at $247 million. Gross margin
expanded 50 basis points to 19.7% in the quarter, the highest
level since 2009. Selling, general and administrative expenses
decreased 1% to $127 million. Adjusted operating income remained
flat at $108 million. Operating margin increased 20 basis points
to 8.6% in the quarter.
Net sales from the U.S. Packaging segment amounted to $750.7
million, down 3% year over year, reflecting the impact of the
sale of its Clysar thin gauge shrink film plant at the end of May
as part of Bemis' facility consolidation program. Excluding the
effect of the sale of the Clysar facility, net sales increased
modestly during the quarter, reflecting a net increase in price
and mix, offset by a decline in unit sales volume.
Adjusted segment operating profit decreased 9% to $97.6
million from $107.5 million, hurt by lower volume, partially
offset by the benefit of a higher proportion of sales of
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Net sales from the Global Packaging segment declined 1.8% to $371
million. The acquisition of Foshan New Changsheng Plastics Films
Co. during the third quarter of 2013 aided sales by 4.8%.
However, a weaker Brazilian currency and production that was
discontinued due to the facility consolidation had a negative
impact on sales. Adjusted segment operating profit increased
16.9% to $28 million due to the favorable impact of improved
Net sales from the Pressure Sensitive Materials segment totaled
$137 million, up 1.2% year over year. Favorable currency
translation and higher unit sales of technical products were
offset by lower unit sales of value-added graphic products.
Segment operating profit was $7.9 million, up 2.6% from $7.7
million reported in the year-ago quarter.
As of Sep 30, 2013, Bemis had cash and cash equivalents of $155
million, up from $114 million as of Dec 31, 2012. Total debt of
the company increased to $1.45 billion as of Sep 30, 2013 from
$1.42 billion as of Dec 31, 2012. The debt-to-capitalization
ratio was at 46.2% as of Sep 30, 2013 compared with 46.5% as of
Dec 30, 2012.
Total cash flow from operating activities for the first nine
months of fiscal 2013 was $262 million compared with $290 million
in the prior-year comparable period.
In July, Bemis expanded its Asia-Pacific foothold with the
purchase of Foshan New Changsheng Plastics Films Co. (NCS).
Headquartered in China, Foshan New Changsheng Plastics Films is a
specialty film manufacturer. The acquisition is expected to have
no significant impact on Bemis' earnings results for 2013.
Incremental net sales from NCS are expected to be approximately
$60 million annually, and the acquisition of this film platform
is expected to provide cost and logistics benefits to support
Bemis' broader Asia-Pacific growth strategy.
Management expects adjusted EPS in the range of 50 cents to 56
cents for the fourth quarter of 2013. For 2013, EPS is projected
to range between $2.24 and $2.30, lower than the previous
guidance of $2.30 to $2.40 per share. The guidance has been
reduced to reflect the expected impact of a weaker Brazilian
currency and increased costs associated with mechanical and
electrical issues encountered during the transition of production
equipment from plants closed as part of the facility
The incremental savings of the facility consolidation activities
are expected to be around $50 million in 2013. Bemis expects cash
flow from operating activities to total approximately $400
million in 2013. The company reiterated its guidance for capital
expenditures in 2013 to a range of $130 million to $140 million.
Weak volume, cautious consumer spending environment, sluggish
European economic outlook remain major concerns. However, savings
from the Bemis cost reduction program and benefits from
acquisitions will help offset these headwinds.
Neenah, WI-based Bemis Company is a global manufacturer of
flexible packaging products and pressure sensitive materials sold
primarily to the food industry. The company also sells its
products to other customers in the chemical, agri-business,
medical, pharmaceutical, personal care, electronics, automotive,
construction, and graphic industries. Bemis currently carries a
Zacks Rank #4 (Sell).
Peer Performance & Expectations
Among the peers of Bemis Company,
Packaging Corporation of America
) posted third-quarter earnings per share of 91 cents, up 65%
from 55 cents in the year-earlier quarter and beat the Zacks
Consensus Estimate of 89 cents.
Sonoco Products Co.
) reported third-quarter 2013 adjusted earnings of 63 cents per
share, up 14% from 55 cents earned in the year-ago quarter and
managing to surpass the Zacks Consensus Estimate of 61 cents.
Graphic Packaging Holding Co.
) is expected to report third-quarter results on Oct 30. The
Zacks Consensus Estimate currently stands at 13 cents,
representing a 20% year-over-year increase.