Bemis Reports Strong Third Quarter Earnings

Bemis Company, Inc. (NYSE:BMS) today reported financial results for its third quarter ended September 30, 2018. Refer to the reconciliation of Non-GAAP measures detailed in the attached schedule, including adjusted earnings per share, adjusted EBITDA, and net debt.

“We delivered strong adjusted earnings per share during the third quarter. We continue to make progress through Agility to fix, strengthen, and grow our business,” said William F. Austen, Bemis Company’s President and Chief Executive Officer. “All of our segments performed in-line with our expectations, overcoming incremental headwinds from currency and freight costs. In our U.S. business, strong operational performance within our factories continued. In our Latin American business, our teams continued to execute cost improvements in light of the challenging economic environment in Brazil. In our Rest of World business, our teams delivered the highest level of operating profit since the reporting segment was created through strong operational performance and organic sales growth of our healthcare packaging business.”

Austen concluded, “Through three quarters of 2018, we have increased adjusted earnings per share by 18 percent over the prior year and implemented numerous operational, commercial, and administrative improvements through Agility. Our teams across the globe are committed to improving our business for the long-term.”

AGILITY PROGRESS
As part of the Company’s previously-announced improvement plan called “Agility” to fix, strengthen, and grow its business, the fix aspect of this plan includes a restructuring and cost savings target of $65 million pre-tax by the end of 2019. Agility-related savings were approximately $9 million during the third quarter of 2018, for a year-to-date total of $26 million, reflecting a solid pace to meet the Company’s full year 2018 savings plan of approximately $35 million. Through three quarters of 2018, the strengthen and grow aspects of Agility are also on pace to meet the Company’s internal targets for growth of short-run business.

PROPOSED COMBINATION WITH AMCOR
On August 6, 2018, Bemis announced a plan for an all-stock combination with Amcor to create the global leader in consumer packaging with the footprint, scale, talent, and capabilities to better serve customers around the world, drive significant value for shareholders, create enhanced opportunities for employees, and deliver the most sustainable innovations for the environment.

Austen stated, “We believe combining these two organizations will drive significant value for shareholders, employees, and customers over the long-term. Bemis shareholders will have the opportunity to benefit from the expected increased dividend, which nearly doubles from Bemis’ current dividend, and the value creation driven from not only the $180 million of cost synergies identified as part of the transaction but also additional potential revenue synergies.”

Austen continued, “We remain on track for the transaction to close in the first quarter of 2019, after regulatory and shareholder approvals. All internal workstreams supporting regulatory filings and integration planning are on pace to our expectations. Until the transaction closes, we will continue to operate as an independent company and will remain focused on serving our customers and delivering our operating plans.”

Austen concluded, “For Bemis, this is the next exciting chapter in our evolution, and our employees will carry forward the Bemis legacy as they showcase their talents, knowledge, and passion for serving our customers and providing inspired packaging solutions as part of the global leader in consumer packaging that is being created through this transaction.”

During the third quarter of 2018, Bemis Company recorded $10 million of costs related to the planned transaction with Amcor, which are excluded from the Company’s adjusted earnings per share metric.

BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $688.4 million for the third quarter of 2018 represented an increase of 2.4 percent compared to the same period of 2017. The increase in net sales was driven primarily by higher selling prices partially offset by lower unit volumes of two percent. Approximately half of the unit volume decline was driven by the Company’s planned shutdown of infant care business at its Shelbyville, Tennessee facility.

U.S. Packaging operating profit was $93.4 million in the third quarter of 2018, or 13.6 percent of net sales, compared to $99.6 million, or 14.8 percent of net sales, in 2017. Prior year U.S. Packaging operating profit included a $4 million benefit from an accrual reversal for unearned customer incentives. Operating profit in the third quarter of 2018 includes the benefits of cost savings from the Company’s Agility plan and improved operations, offset by freight, current-year customer incentives, and the impact of strong results on employee pay-for-performance awards.

Latin America Packaging
Latin America Packaging net sales of $148.3 million for the third quarter of 2018 represented a decrease of 19.3 percent compared to the same period of 2017. Currency translation and the impact of implementing high inflation accounting in the Company’s business in Argentina decreased net sales by 23.7 percent. Organic sales growth of 4.4 percent reflects improved sales price and mix partially offset by decreased unit volumes of 15 percent driven primarily by the planned decrease of some laundry detergent packaging volume in Brazil that is converting to another format.

Latin America Packaging operating profit increased to $8.0 million in the third quarter of 2018, or 5.4 percent of net sales, compared to $7.3 million, or 4.0 percent of net sales, in 2017. The net impact of currency translation decreased operating profit during the third quarter by $1.7 million. Additionally, the implementation of high inflation accounting in the Company’s Argentina business negatively impacted operating profit by $1.4 million during the third quarter of 2018. The remaining $3.8 million increase in Latin America Packaging operating profit was driven by variable and fixed cost savings actions implemented in light of the challenging economic environment in Brazil and the Company’s Agility plan, partially offset by the impact of volume.

Rest of World Packaging
Rest of World Packaging net sales of $189.7 million for the third quarter of 2018 represented an increase of 6.0 percent compared to the same period of 2017. Currency translation decreased net sales by 0.8 percent. The acquisition of Evadix increased net sales by 1.2 percent. Organic sales growth of 5.6 percent reflects increased unit volumes of approximately three percent and increased sales price and mix.

Rest of World Packaging operating profit increased to $22.2 million in the third quarter of 2018, or 11.7 percent of net sales, compared to $17.3 million, or 9.7 percent of net sales, in 2017. The net impact of currency translation decreased operating profit during the third quarter by $0.2 million. The increase in operating profit in Rest of World Packaging was driven primarily by increased sales volume and strong performance in healthcare packaging.
more detail at: https://investors.bemis.com/press-release/bemis-reports-strong-third-quarter-earnings

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