Bemis Company Reports 2017 Results, 2018 Outlook

Bemis Company, Inc. reported financial results for its fourth quarter ended Dec. 31, 2017. Cash flow from operations are expected to be in the range of $420 to $450 million, which includes approximately $50 million of restructuring and related cash costs.
 
“We made progress during the second half of 2017, as reflected in adjusted operating profit that was up nearly $35 million compared to the first half of the year. This increase reflects operational improvements and the early benefits of Agility, which is our plan to fix, strengthen, and grow our business,” said William F. Austen, Bemis Company’s president and CEO. “We are focused on executing our plan to create a more agile, streamlined, and efficient business.”
 
During 2017, the Company launched an improvement plan called “Agility” to fix, strengthen, and grow its business. As part of this three-pronged approach, the fix aspect involves the restructuring and cost savings plan announced in June and increased in September to target pre-tax annual savings of $65 million.
 
The strengthen and grow aspects of Agility create the foundation for the Company’s long-term success by simplifying its product portfolio and organizational structure, rebalancing R&D efforts to focus on manufacturing improvements, and deliberately pursuing targeted areas of growth in its North American business.
 
Effective with reporting for the fourth quarter of 2017, the company realigned its segment reporting to transition from two reportable segments to three reportable segments as follows: US Packaging, Latin America Packaging, and Rest of World Packaging.
 
The US Packaging business segment is unchanged. The company will now report Latin America Packaging and Rest of World Packaging business segments, which had previously been aggregated and named Global Packaging.
 
US Packaging net sales of $643.3 million for the fourth quarter of 2017 represented an increase of 1.8% compared to the same period of 2016. US Packaging net sales of $2,626.0 million for the full year 2017 represented an increase of 0.2% compared to the same period of 2016. Compared to the prior year, unit volumes were up nearly 1%.
 
US Packaging operating profit decreased to $89.3 million in the fourth quarter of 2017, or 13.9% of net sales, compared to $94.0 million, or 14.9% of net sales, in 2016. US Packaging operating profit decreased to $352.5 million for the full year 2017, or 13.4% of net sales, compared to $400.0 million, or 15.3% of net sales, in 2016.
 
Latin America Packaging net sales of $178.7 million for the fourth quarter of 2017 represented a decrease of 0.6% compared to the same period of 2016. Latin America Packaging net sales of $711.4 million for the full year of 2017 represented an increase of 1.2% compared to the full year of 2016.
 
Latin America Packaging operating profit for the fourth quarter was $6.2 million, compared to $15.2 million for the same period in 2016. Latin America Packaging operating profit for the full year was $30.0 million, compared to $50.0 million for the same period in 2016. Compared to the prior year, lower profits in Latin America Packaging were driven primarily by the impacts of the challenging economic environment in Brazil, including lower unit volumes and unfavorable mix of products sold.
 
Rest of World Packaging net sales of $181.6 million for the fourth quarter of 2017 represented an increase of 3.1% compared to the same period of 2016. Currency translation increased net sales by 4.1%. Rest of World Packaging net sales of $708.8 million for the full year 2017 represented an increase of 4.2% compared to the full year of 2016. Currency translation decreased net sales by 1.7%.
 
Rest of World Packaging operating profit for the fourth quarter was $15.4 million, compared to $18.2 million for the same period in 2016. Rest of World Packaging operating profit for the full year 2017 was $61.1 million, compared to $64.0 million for the same period in 2016
 
Cash flow from operations for the 12 months ended Dec. 31, 2017 was $379.0 million, compared to $437.4 million in the prior year. Total company net debt to adjusted EBITDA was 2.7 times at Dec. 31, 2017.
 
Management expects adjusted diluted earnings per share to be in the range of $2.75 to $2.90 for the full year 2018, which includes a $.31 per share benefit related to US tax reform at the midpoint of the range. Management expects full year 2018 cash from operations to be in the range of $420 to $450 million.
 
“Our adjusted earnings guidance reflects a double-digit increase over last year, driven in part by US tax reform and in part by the decisive actions we have taken to improve our cost structure through the fix portion of our Agility plan,” said Austen.