“Bemis achieved record first quarter adjusted earnings per share,” said Henry Theisen, Bemis Company’s chairman and CEO. “Our first quarter volumes are typically slower as we prepare for the seasonally stronger spring and summer months. This quarter, slightly lower sales volumes were driven by a slowdown in customer demand due to recent weather events in North America and inflationary pressures in Brazil. As we head into the second quarter, we are pleased to see healthy customer order levels, and we are commercializing new business at an accelerated pace to support expected unit volume and profit margin growth in 2014.”
• Adjusted diluted earnings per share for the first quarter increased 9.4% to $0.58, in line with management’s guidance for the quarter.
• Management announced the planned closure of a Pressure Sensitive Materials plant, resulting in a $25 million pre-tax charge in the first quarter, most of which impacted Cost of Products Sold.
• Excluding the charge related to the plant closure noted above, gross profit as a%age of net sales for the first quarter improved sequentially as compared to the fourth quarter of 2013 and was consistent with first quarter 2013 levels.
• On March 31, 2014, Bemis completed the sale of its Paper Packaging Division. A $9.4 million pre-tax gain was recorded on the sale as part of other non-operating income.
• Bemis repurchased approximately 1.1 million shares of its common stock at a cost of $43.2 million.
• Bemis increased its quarterly cash dividend by 4%, the 31st consecutive annual increase.
• Management established adjusted diluted earnings guidance for the second quarter of 2014 in the range of $.61 to $.66 per share and confirmed total year 2014 earnings guidance in the range of $2.40 to $2.55 per share.
Business Segment Results:
• U.S. Packaging net sales of $738.2 million for the first quarter 2014 represented a decrease of 1.0% compared to the same period of 2013. The prior year Clysar divestiture reduced sales by 2.2%. The remaining net sales increase was driven primarily by the benefit of improved price and mix partially offset by a modest decrease in unit sales volume.
U.S. Packaging operating profit for the first quarter of 2014 was $91.8 million, or 12.4% of net sales, compared to $86.0 million, or 11.5% of net sales, in the same period of 2013. Excluding facility consolidation costs in 2013, segment adjusted operating profit for 2013 would have been $95.4 million, or 12.8% of net sales.
• Global Packaging net sales for the first quarter 2014 of $356.8 million represented a decrease of 3.2% compared to the first quarter of 2013. Currency translation decreased net sales by 8.4%, primarily driven by the Brazilian real. The acquisition of the extrusion platform in Foshan, China increased net sales by 4.6%. Excluding the impact of currency translation and acquisition, the remaining increase in Global Packaging net sales reflects the benefits of improved price and mix in 2014 partially offset by lower unit sales volumes.
Global Packaging operating profit for the first quarter was $24.1 million, or 6.8% of net sales, compared to $25.9 million, or 7.0% of net sales, for the same period in 2013. Excluding the impact of facility consolidation program and acquisition-related integration items, segment adjusted operating profit would have been $25.3 million, or 6.9% of net sales in 2013. The net effect of currency translation decreased operating profit during the first quarter of 2014 by $2.8 million.
• Pressure Sensitive Materials net sales totaled $142.8 million for the first quarter, a 1.6% increase from the same period in 2013. Currency translation increased net sales by 1.4% compared to the prior year.
Costs associated with a plant closure negatively impacted operating profit for the first quarter by $25 million, resulting in a net operating loss of $14.5 million, compared to operating profit of $7.7 million, or 5.5% of net sales, for the first quarter of 2013. Excluding these plant closure costs, segment adjusted operating profit for 2014 would have been $10.5 million, or 7.4% of net sales.
Commenting on the rest of the year, Theisen stated, “Our outlook for 2014 is unchanged. We continue to aggressively manage our business to improve operating performance and deliver growth in value-added products.”