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Bemis (BMS) Beats on Q4 Earnings by a Penny; Sales Lag

Bemis Company, Inc.BMS reported fourth-quarter 2016 adjusted earnings per share of 67 cents, up around 12% year over year. Earnings beat the Zacks Consensus Estimate by a penny. Including one-time costs, earnings came in at 64 cents per share compared with 58 cents reported in the prior-year quarter.

The company's shares fell around 0.7% to $49.47 after the company posted its fourth-quarter 2016 results on Jan 26.

Operational Update

Net sales increased to $988 million from $982.7 million in the year-ago quarter. Revenues also fell short of the Zacks Consensus Estimate of $1,023 million.

Bemis Company, Inc. Price, Consensus and EPS Surprise

Bemis Company, Inc. Price, Consensus and EPS Surprise | Bemis Company, Inc. Quote

Cost of products sold inched up 0.3% year over year to $772 million in the quarter. Gross profit increased 1.3% to $215.6 million from $212.9 million in the prior-year quarter. Gross margin expanded 10 basis points (bps) to 21.8% in the quarter. Selling, general and administrative expenses decreased 10.5% to $96.6 million from $107.9 million in the year-ago quarter. Adjusted operating income rose 13% year over year to $107 million. Adjusted operating margin advanced 130 bps to 10.9% in the quarter.

Segment Performance

Net sales at the U.S. Packaging segment dipped 3.6% year over year to $632 million. The decrease in net sales was due to the mix of products sold. Segment operating profit was up 0.5% to $94 million from $93.5 million in the prior-year quarter.

Net sales at the Global Packaging segment climbed 8.8% year over year to $356 million. Currency translation had an impact of 4%, while acquisitions contributed 7.6%. Excluding the impact of currency translation and acquisitions, net sales jumped 5.3%, reflecting increased sales price. Unit volumes remained flat year over year. Segment operating profit was up 19% to $33.4 million from $28 million in the year-ago quarter.

Financial Update

At the end of 2016, Bemis generated cash and cash equivalents of $74 million, which increased from $59 million at the end of 2015. Cash flow from operations came in at $437.4 million in 2016 compared with $552.4 million in the prior year.

At the end of 2016, Bemis' total debt increased to $1,545 million, compared with $1,389 million at the end of 2015. During the reported quarter, the company repurchased 1 million shares for $48.5 million. As of the quarter end, the remaining Board authorization for the repurchase of stock was 20.4 million shares.

2016 Performance

Bemis reported adjusted earnings per share of $2.69 in 2016, up 5.5% from $2.55 per share recorded in the prior year. Earnings outpaced the Zacks Consensus Estimate of $2.68 per share. Including one-time items, the bottom line came in at $2.48, up 0.4% from $2.47 recorded in 2015.

Revenues edged down 1.7% year over year to $4 billion from $4.07 billion in 2015. The top line also missed the Zacks Consensus Estimate of $4.04 billion.

Guidance

Bemis projects adjusted earnings per share to be in the range of $2.85-$3.00 in 2017. Management continues to expect cash from operations to be in the range of $440-$480 million and capital expenditures to be approximately $200 million for full-year 2017.

Share Price Performance

In the last one year, Bemis has underperformed the Zacks classified Containers & Glass sub-industry with respect to price performance. The stock gained 4.8%, while the industry rose 31.9% over the same time frame.

Zacks Rank

Bemis currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same sector are ABB Ltd ABB , Altra Industrial Motion Corp. AIMC and Apogee Enterprises, Inc. APOG .

ABB Ltd has delivered an average positive earnings surprise of 23.50% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Altra Industrial Motion also boasts a Zacks Rank #1 and has delivered an average positive earnings surprise of 8.06% in the trailing four quarters. Apogee, another Zacks Rank #1 stock, has an average positive earnings surprise of 13.24% for the past four quarters.

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Bemis Company, Inc. (BMS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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