) reported first-quarter 2014 adjusted earnings from continuing
operations of 23 cents per share, which marked an over twofold
increase from the year ago quarter's earnings per share of 9
cents. However, the reported figure missed the Zacks Consensus
Estimate of 26 cents.
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Including one-time items, earnings in the quarter came in at 18
cents per share, turning around the year-ago quarter loss per
share of 1 cent.
Total revenue rose 1% year over year to $1.32 billion, led by
favorable price and mix. However, sales missed the Zacks
Consensus Estimate of $1.35 billion.
Cost of sales decreased 3.6% year over year to $1.07 billion.
Gross profit improved 26% to $247 million from $196 million in
the year-ago quarter and gross margin increased 370 basis points
(bps) to 18.7%.
Selling, general and administrative expenses in the reported
quarter declined 4.2% year over year to $161 million. Adjusted
operating profit increased threefold to $86 million from $28
million in the year-ago quarter. Consequently, operating margin
expanded 440 bps to 6.5%.
Food & Beverage:
Revenues in the segment inched up 0.3% year over year to $763
million. The increase was driven by solid pricing and product mix
gains, along with volume growth. Segment profit increased 37.5%
to $55 million from $40 million in the year-ago quarter.
Home, Health & Beauty:
Revenues in the segment increased 9% to $205 million from $188
million in the prior-year quarter, led by rise in the demand of
value home and garden, beauty and skin care, fragrance and
medical dispensing solutions. Profit for the segment was $12
million, improving fourfold from the year-ago quarter profit of
Net sales in the quarter were $128 million as compared with $132
million in the prior-year quarter. Segment profit increased 45%
year over year to $16 million, aided by increased product pricing
and improved productivity in Brazilian operations.
The segment reported revenues of $232 million, up 2.7% from the
year-ago quarter, driven by solid pricing and product mix gains,
along with volume growth and positive productivity from improved
utilization rates. The segment's profit increased 4% to $51
million from the year-ago quarter.
Community Development and Land Management:
Segment sales declined 60% year over year to $2 million. The
segment reported an operating loss of $3 million, narrower than
the year-ago quarter loss of $4 million.
Financial Position & Other Updates
As of Mar 31, 2014, MeadWestvaco's cash and cash equivalents were
$332 million versus $1.06 billion as of Dec 31, 2013. The company
recorded cash usage of $208 million from operating activities in
the reported quarter as against $87 million in the year-ago
Long-term debt remained flat at $1.8 billion as of Mar 31, 2014
as compared as of Dec 31, 2013. Debt-to-capitalization ratio was
34.5% as of Mar 31, 2014, up from 31.5% as of Dec 31, 2013.
During the first quarter, the company entered into an accelerated
stock repurchase program and bought back shares of $300 million,
using proceeds from the recently completed forestland assets sale
Plum Creek Timber Co. Inc.
MeadWestvaco paid a regular quarterly dividend of 25 cents per
share and a special dividend of $1.00 per share, using proceeds
from the forestland assets sale during the quarter.
Though MeadWestvaco did not provide any specific guidance for
fiscal 2014, it expects earnings to be higher than fiscal 2013 on
the back of consistent volume improvement in paperboard packaging
and high value dispensing.
Furthermore, improved productivity and continued positive
operating leverage from increased plant utilization rates will
boost earnings. However, increased cost of raw materials and
weakness in currency remains matters of concern.
We believe that going forward, MeadWestvaco will be benefit from
its new products, growth strategies, expansion in Brazil,
acquisitions and sale of nonperforming businesses.
Richmond, VA-based MeadWestvaco is a global packaging company
providing innovative solutions to the world's most renowned
brands in the healthcare, beauty and personal care, food,
beverage, home and garden, tobacco, and agricultural industries.
The company also produces specialty chemicals for automotive,
energy and infrastructure industries.
Currently, MeadWestvaco has a Zacks Rank #3 (Hold). Some
better-ranked stocks in the containers industry that are
performing well and have a good visibility include
Berry Plastics Group, Inc.
Graphic Packaging Holding Co.
). Both of these carry a Zacks Rank #2 (Buy).