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Bemis Company Reports Strong 2010 Third Quarter Results

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  Published in House and Home on Thursday, October 28th 2010 at 5:12 GMT by Market Wire
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NEENAH, Wis.--([ BUSINESS WIRE ])--Bemis Company, Inc. (NYSE:BMS) today reported quarterly diluted earnings from continuing operations of $0.56 per share for the third quarter. Excluding the effect of special charges, diluted earnings per share from continuing operations, as adjusted, would have been $0.57 for the third quarter of 2010, in line with managementa™s guidance of $0.55 to $0.60 per share. This is an 18.8 percent increase compared to adjusted diluted earnings per share of $0.48 for the third quarter of 2009. Special charges primarily include Food Americas transaction and integration expenses as detailed in the attached schedule, aReconciliation of Non-GAAP Data.a

"I am pleased to report the continued successful integration of our Food Americas acquisition"

Highlights of the third quarter:

• Record quarterly net sales of $1.3 billion reflected healthy total company organic sales growth of about 8 percent and acquisition related growth of about 36 percent.
• Adjusted diluted earnings per share increased 18.8 percent.
• Cash flow from operations totaled $125.0 million for the third quarter of 2010.
• Capital expenditures guidance for the total year 2010 is being reduced to approximately $115 million, reflecting the benefits of acquisition synergies and efficiency initiatives.
• Management expects total year adjusted diluted earnings per share to be $2.10 - $2.15 per share, an increase of over 12 percent compared to the record results of 2009.

aI am pleased to report the continued successful integration of our Food Americas acquisition,a said Henry Theisen, Bemis Companya™s President and Chief Executive Officer. aSo far in 2010, we have delivered double-digit growth in adjusted earnings per share compared to the record results of 2009. We are on track to achieve our planned acquisition related cost savings synergies in 2010 and 2011. Demand for packaging products in the Americas continues to be robust, offsetting continued weakness in the European region. While we expect to face modest raw material cost pressures during the fourth quarter, our 2010 adjusted earnings per share guidance continues to reflect double-digit growth.a

BUSINESS SEGMENTS

Flexible Packaging

Our flexible packaging business segment net sales increased approximately 51 percent to $1.15 billion for the third quarter of 2010 compared to the same period of 2009. Bemis estimates that acquisitions increased net sales by approximately 42 percent during the quarter. Currency effects increased net sales by less than one percent. The remaining 8 percent growth in net sales reflects increased sales across most of our market categories including meat and cheese, dairy and liquids, dry foods, medical, and pharmaceutical packaging.

Flexible packaging operating profit for the third quarter of 2010 was $135.8 million, or 11.8 percent of net sales, compared to $106.0 million, or 13.9 percent of net sales, for the same period of 2009. Excluding the effect of special charges, flexible packaging operating profit, as adjusted, for the third quarter would have been $136.3 million, or 11.8 percent of net sales, in 2010 compared to $102.4 million, or 13.4 percent of net sales, in 2009. (See attached schedule: aReconciliation of Non-GAAP Data.a) The effect of currency translation increased operating profit in the third quarter of 2010 by $0.9 million. The decrease in operating profit as a percentage of net sales reflects the generally lower operating margins of the Food Americas operations acquired in March 2010. Increasing cost saving synergies are expected to improve operating margins as acquisition integration efforts continue. In addition, operating margins include the negative impact of lower profits in the European operations compared to record operating performance in that region in 2009.

Pressure Sensitive Materials

Pressure sensitive materials net sales increased 5.3 percent to $142.0 million for the third quarter of 2010 compared to the same period of 2009, driven primarily by higher unit sales volumes across all product lines and geographies. Currency effects reduced net sales by 4.4 percent compared to the third quarter of 2009.

Pressure sensitive materials operating profit for the third quarter was $7.6 million, or 5.4 percent of net sales, compared to operating profit of $5.4 million, or 4.0 percent of net sales, for the same period of 2009. Currency translation reduced operating profit in the third quarter of 2010 by $0.3 million compared to the same quarter of 2009. Higher operating profit as a percentage of net sales primarily reflects the impact of sales volume growth compared to the third quarter of 2009.

CONSOLIDATED ITEMS

Selling, general, and administrative expenses were higher for the third quarter of 2010 compared to the same quarter of 2009, reflecting the impact of the Food Americas acquisition on March 1, 2010. As a percentage of net sales, selling, general, and administrative expenses were consistent with the second quarter of 2010 at 8.8 percent.

Interest expense increased to $18.3 million in 2010 compared to $13.4 million during the third quarter of 2009. This increase primarily reflects a partial quarter of interest costs in 2009 related to acquisition financing at the end of July 2009.

For the third quarter of 2010, other operating income and expense included $3.5 million of fiscal incentive income, a decrease of $1.1 million compared to the third quarter of 2009. Fiscal government incentives are associated with certain Brazilian operations and are included in flexible packaging segment operating profit. Other operating income and expense during the third quarter of 2010 also included $1.2 million of transaction costs, compared to $16.0 million of fees associated with the Food Americas acquisition during the third quarter of 2009.

Cash Flow

Cash provided by operating activities was $125.0 million for the third quarter of 2010, a 2.9 percent decrease compared to the third quarter of 2009. Working capital continued to increase this quarter due primarily to the impact of acquisition transition and system integration activities. Working capital was a significant source of cash during the first nine months of 2009 reflecting declining raw material costs and improved operating profit levels compared to 2008.

On July 13, 2010, Bemis completed the sale of its discontinued operations for net cash proceeds of approximately $75.2 million. During the third quarter of 2010, proceeds from this disposition and cash provided by operations were used to complete $25.4 million of capital expenditures, pay $25.5 million of common stock dividends, repurchase $29.2 million of Bemis common stock, and reduce debt outstanding by $96.4 million.

Fourth Quarter and Full Year 2010 Outlook

Management expects adjusted diluted earnings per share from continuing operations for the fourth quarter of 2010 to be in the range of $0.48 to $0.53, resulting in the full year 2010 guidance in a range of $2.10 to $2.15 per share. Capital expenditures guidance has been reduced from $140 million to approximately $115 million. This lower capital investment level reflects the benefits of the Food Americas acquisition integration and Bemisa™ ongoing production efficiency initiatives. Depreciation and amortization expense is expected to be approximately $210 million for 2010.

Guidance for adjusted annual diluted earnings per share from continuing operations excludes a $0.06 per share impact of acquisition financing costs for the first two months of 2010 before the Food Americas acquisition was completed. In addition, adjusted earnings per share guidance does not reflect the impact of severance charges, acquisition related professional and legal fees, or purchase accounting adjustments for inventory and order backlog.

Presentation of Non-GAAP Information

Guidance in this press release uses 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 workforce reductions, acquisition related costs, and purchase accounting adjustments for inventory and order backlog. 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 investora™s understanding of the impact of these items on the comparability of the Companya™s 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 aforward-lookinga 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, consumer buying patterns, changes in customer order patterns, the results of competitive bid processes, costs associated with the pursuit of business combinations, unexpected costs associated with integrating acquisitions, a failure in our information technology infrastructure or applications, foreign currency fluctuations, 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 Companya™s regular SEC filings including the most recently filed Form 10-K for the year ended December 31, 2009.

Investor Conference Call

Bemis Company, Inc. will webcast an investor telephone conference regarding its third quarter 2010 financial results this morning at 10 a.m., Eastern Time. Individuals may listen to the call on the Internet at [ www.bemis.com ] under aInvestor Relations.a 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 pro forma 2009 net sales, giving effect to the Food Americas acquisition, of $4.8 billion. The Companya™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 ].