NEENAH, WISCONSIN, October 26, 2011 - Bemis Company, Inc. (NYSE-BMS) today reported its 2011 third quarter results:
Highlights of the third quarter 2011:
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Net sales increased by 4.9 percent to $1.4 billion.
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Diluted
earnings per share was $0.53, including charges of $0.03 per share
related to acquisitions completed during the quarter.
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Adjusted
diluted earnings per share would have been $0.56, consistent with the
low end of management's guidance for the quarter (See attached schedule,
"Reconciliation of Non-GAAP Data.")
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Flexible
packaging segment operating profit primarily reflected the negative
effect of lower unit volume levels compared to the same period of 2010,
especially in our South American operations.
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Record quarterly cash provided by operating activities was $169 million.
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Repurchases of Bemis common stock totaled 1.2 million shares.
Fourth quarter guidance:
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Capacity
optimization initiatives, including workforce reductions and several
small plant closings, are expected to result in severance and other
special charges in the future. Severance charges in the fourth quarter
are expected to approximate $0.04 per share.
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Management
established adjusted diluted earnings guidance for the fourth quarter
of 2011, excluding the severance charges highlighted above, at $0.36 to
$0.42 per share, reflecting the negative impact of lower unit sales
volumes expected to continue through the end of the year.
"During
the third quarter, unit volumes decreased in nearly every market
category, reflecting the concern about softness in demand that our
customers had expressed earlier in the year," said Henry Theisen, Bemis
Company's President and Chief Executive Officer. "Food price inflation
has driven grocery store prices higher in 2011, challenging consumers to
stretch their grocery store dollars. Most of our customers experienced
lower unit sales volumes in many of the product categories for which we
provide packaging, and we expect this trend to continue through the
fourth quarter.
"At Bemis, we have responded to
lower volume levels by reducing our workforce. In addition, we are
undertaking optimization initiatives that will result in the closing of
several small plants globally and leveraging our most efficient
facilities and proprietary technologies over the next year. These
initiatives are possible because of the progress we have made in
activities around specification consolidation and production efficiency.
Efforts associated with these activities are expected to reduce fixed
costs and optimize our facilities to create a manufacturing platform
from which to expand in the future."
CONSOLIDATED RESULTS
Total
Bemis net sales were $1.36 billion for the third quarter of 2011, a 4.9
percent increase from $1.29 billion for the same period of 2010. Sales
growth included a 2.3 percent increase due to currency translation.
The remaining increase in net sales reflects higher selling prices
offset by lower unit sales volumes.
Diluted
earnings per share from continuing operations for the third quarter of
2011 was $0.53 compared to $0.56 per share for the same quarter of 2010.
Excluding professional fees and other acquisition associated costs
incurred, adjusted diluted earnings from continuing operations would
have been $0.56 per share for the current quarter compared to $0.57 per
share in the same quarter of 2010.
FLEXIBLE PACKAGING BUSINESS SEGMENT
Bemis'
flexible packaging business segment reported net sales of $1.22
billion. This represents a 5.5 percent increase compared to net sales
of $1.15 billion for the third quarter of 2010. Currency effects
increased net sales by 2.1 percent. The remaining sales growth
reflected higher selling prices compared to the third quarter of 2010,
partially offset by lower unit sales volumes. Segment operating profit
for the third quarter of 2011 was $117.4 million, or 9.7 percent of net
sales, compared to operating profit of $133.9 million, or 11.6 percent
of net sales for the same period of 2010. Excluding the impact of
purchase accounting charges and integration costs, operating profit as a
percentage of net sales would have been 9.8 percent for the third
quarter of 2011 compared with 11.7 percent for the same period of 2010.
The effect of currency translation increased operating profit in the
third quarter of 2011 by $1.8 million compared to the same quarter of
2010. Raw material cost increases in 2011 have negatively impacted
operating margins as a percentage of net sales, and lower unit volumes
across most market categories have resulted in additional negative
margin pressure.
Commenting on the flexible
packaging segment results, Theisen said, "We have addressed the raw
material cost increases from the first half of the year with selling
price adjustments, many of which were implemented during the third
quarter. The benefits of these price adjustments were more than offset
by the negative impact of generally lower unit sales volumes this
quarter. Food price inflation has led to retail consumer price
increases and reduced consumer demand for many of our customers'
packaged food products during this period of economic weakness. In North
America, we experienced lower unit volumes in the majority of our
market categories. In Europe, a decline in unit volumes was
substantially offset by higher selling prices and better sales mix.
Unit volumes in our South American operations were also lower in most
market categories, and recent currency fluctuations have driven the
price of both imported and domestic raw materials higher in that region,
putting further pressure on our operating results.
"We
have made progress in optimizing production between facilities and
reducing specifications to improve manufacturing efficiency. We expect
our ongoing optimization efforts to position us well to maximize
performance in the future as volumes strengthen and new products are
commercialized."
PRESSURE SENSITIVE MATERIALS BUSINESS SEGMENT
Net
sales from the pressure sensitive materials business segment for the
third quarter of 2011 were $141.8 million, about even with the third
quarter of 2010. Currency effects increased net sales by 3.8 percent.
For the third quarter of 2011, operating profit totaled $8.0 million,
or 5.6 percent of net sales, compared to operating profit for the third
quarter of 2010 of $7.6 million, or 5.4 percent of net sales. Currency
effects increased operating profit for the quarter by $0.3 million. Both
net sales and operating profit performance reflect the impact of lower
unit volumes offset by higher selling prices and lower period costs.
OTHER OPERATING (INCOME) EXPENSE, NET
For
the third quarter of 2011, other operating income and expense included
$4.9 million of fiscal incentive income, an increase of $1.4 million
compared to $3.5 million for the third quarter of 2010. Government
fiscal incentives are associated with net sales and manufacturing
activities in certain operations in Brazil and are included in flexible
packaging segment operating profit.
OTHER NON-OPERATING (INCOME) EXPENSE, NET
Other non-operating income included a $1.1 million gain on the sale of excess land during the third quarter of 2011.
CAPITAL STRUCTURE AND CASH FLOW
Total
debt as of September 30, 2011 was $1.6 billion, an increase of $124
million from the balance of $1.5 billion at June 30, 2011. Total cash
flow from operating activities for the quarter ended September 30, 2011
was a record $169 million. Cash available for the quarter was used to
fund shareholder dividends, capital expenditures, the acquisition of the
Mayor Packaging business, the acquisition of the preferred shares of a
subsidiary, and the purchase of 1.2 million shares of Bemis common
stock. As of September 30, 2011, the remaining share repurchase
authorization was 4.5 million shares.
2011 EARNINGS OUTLOOK
Commenting
on the fourth quarter, Theisen said, "We expect unit volumes to
continue to decline during the fourth quarter, and we are aggressively
reducing costs to restore margins and support growth in the future. Our
ongoing optimization activities will position Bemis to improve
operating performance, while leveraging our proprietary technologies to
deliver superior solutions to our customers."
Management
expects adjusted diluted earnings per share for the fourth quarter of
2011 to be in the range of $0.36 to $0.42. Fourth quarter severance
charges associated with the optimization activities are expected to be
in the range of $0.04 per share and will save about $0.06 per share in
annualized costs beginning in 2012. These optimization related costs
are not included in management's quarterly guidance.
Adjusted
diluted earnings per share for the full year 2011 is expected to be in
the range of $1.90 to $1.96 per share. Capital expenditures are
expected to be approximately $125 million for the full year 2011.
PRESENTATION OF NON-GAAP INFORMATION
This
press release refers to non-GAAP financial measures: adjusted operating
profit, adjusted operating profit as a percentage of net sales, and
adjusted diluted earnings per share from continuing operations. These
non-GAAP financial measures adjust for factors that are unusual or
unpredictable. These measures exclude the impact of certain amounts
related to acquisition related expenses including transaction expenses,
due diligence expenses, professional and legal fees, purchase accounting
adjustments for inventory and order backlog, integration expenses, the
cash portion of any acquisition earn-out payments recorded as
compensation expenses, changes in fair value of deferred acquisition
payments, and goodwill and intangible asset impairment charges. This
adjusted information should not be construed as an alternative to
results determined in accordance with accounting principles generally
accepted in the United States of America (GAAP). It is provided solely
to assist in an investor's understanding of the impact of these items on
the comparability of the Company's on-going business operations.
FORWARD LOOKING STATEMENTS
Statements
in this release that are not historical, including statements relating
to the expected future performance of the Company, are considered
"forward-looking" and are presented pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995. Such
content is subject to certain risks and uncertainties, including but not
limited to future changes in cost or availability of raw materials, our
ability to adjust selling prices, consumer buying patterns, changes in
customer order patterns, the results of competitive bid processes, costs
associated with the pursuit of business combinations, a failure in our
information technology infrastructure or applications, foreign currency
fluctuations, unexpected costs associated with plant closings, changes
in working capital requirements, changes in government regulations, and
the availability and related cost of financing from banks and capital
markets. Actual future results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors which are detailed in the
Company's regular SEC filings including the most recently filed Form
10-K for the year ended December 31, 2010.
INVESTOR CONFERENCE CALL
Bemis
Company, Inc. will webcast an investor telephone conference regarding
its third quarter 2011 financial results this morning at 10 a.m.,
Eastern Time. Individuals may listen to the call on the Internet at www.bemis.com
under "Investor Relations." Listeners are urged to check the website
ahead of time to ensure their computers are configured for the audio
stream. Instructions for obtaining the required, free, downloadable
software are available in a pre-event system test on the site.
ABOUT BEMIS COMPANY, INC.
Bemis
Company is a major supplier of flexible packaging and pressure
sensitive materials used by leading food, consumer products, healthcare,
and other companies worldwide. Founded in 1858, the Company is
included in the S&P 500 index of stocks and reported 2010 net sales
of $4.8 billion. The Company's flexible packaging business has a strong
technical base in polymer chemistry, film extrusion, coating and
laminating, printing, and converting. Headquartered in Neenah,
Wisconsin, Bemis employs over 20,000 individuals worldwide. More
information about the Company is available at our website,
www.bemis.com.
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Bemis Company, Inc.
One Neenah Center, 4th Floor
P.O. Box 669
Neenah, Wisconsin 54957-0669
For additional information please contact:
Melanie E. R. Miller
Vice President, Investor Relations and Treasurer
(920)527-5045
Kristine Pavletich
Public Relations Specialist
(920)527-5159