Bemis Company Reports Third Quarter 2008 Results
Print this articleSource: Melanie E. R. Miller: Vice President and Treasurer
Date: 10/28/2008
NEENAH, WISCONSIN, October 28, 2008 - Bemis Company, Inc. (NYSE-BMS) today reported quarterly diluted earnings of $0.44 per share for the third quarter ended September 30, 2008, a 10.0 percent increase compared to $0.40 per share for the third quarter of 2007. Net sales increased to a record $984.3 million for the third quarter of 2008, an 8.7 percent increase from $905.7 million for the same period of 2007. Currency benefits contributed 2.9 percent to net sales for the quarter.
"We enjoyed strong sales growth this quarter in the key markets where we have been investing," said Henry Theisen, Bemis Company's President and Chief Executive Officer. "We have also responded aggressively to the escalating input costs this year. In this challenging economic environment, attention to cost management and customer service is imperative. Our business teams are successfully navigating the current global market conditions and are prepared to meet the challenges ahead."
BUSINESS SEGMENTS
Flexible Packaging
Flexible packaging, which represented about 84 percent of total Bemis net sales during the quarter, reported net sales of $826.4 million in the third quarter, a 10.9 percent increase compared to net sales of $745.4 million for the third quarter of 2007. Currency related sales growth totaled 2.8 percent. Segment operating profit for the third quarter of 2008 was $82.4 million, or 10.0 percent of net sales. Segment operating profit for the third quarter of 2007 was $81.6 million, or 10.9 percent of net sales. Currency benefits added $1.5 million to operating profit in the third quarter of 2008. This quarter's operating profit reflects the impact of higher input costs incurred in 2008.
Commenting on the flexible packaging segment results, Theisen said, "Healthy sales growth in our flexible packaging segment was driven by a combination of volume growth and price increases across the majority of our end markets. We recorded double-digit sales growth in nearly 60 percent of our markets, with sales declines limited to pet products, overwrap for bottled water, and confectionery and snack markets. Performance in our medical device packaging operations has improved after last year's disruption from the start-up of new equipment and facilities. Our European teams continue to deliver improved operating results as they reap the benefits of customer acceptance of new product offerings and implement a World Class Manufacturing program. In this volatile global economic environment, we are aggressively responding to market conditions and will continue to work diligently to maintain our sales momentum and protect our operating profit."
Pressure Sensitive Materials
Net sales from the pressure sensitive materials business segment for the third quarter of 2008 were $157.8 million, a 1.5 percent decrease from net sales of $160.2 million in the third quarter of 2007. Currency related sales growth totaled 3.0 percent. Segment operating profit for the third quarter of 2008 was $9.0 million, or 5.7 percent of net sales, compared to the third quarter of 2007 when segment operating profit was $9.1 million, or 5.7 percent of net sales. Currency benefits added $0.5 million to operating profit in the third quarter of 2008.
"Our pressure sensitive materials business is reflecting the impact of weak economic conditions in both North America and Europe," said Theisen. "In this environment, our teams have successfully maintained profit levels by focusing on cost management and adjusting selling prices to reflect raw material cost increases."
Other Costs (Income), Net
For the third quarter of 2008, other costs and income included $9.2 million of financial income compared to $7.2 million for the third quarter of 2007.
Capital Structure
Total debt to total capitalization was 32.5 percent at September 30, 2008, compared to 32.9 percent at December 31, 2007. Total debt as of September 30, 2008 was $826.3 million, a decrease of $17.0 million from the balance of $843.3 million at December 31, 2007. Cash flow from operations was $78.6 million in the third quarter of 2008. Increased working capital levels primarily reflect higher raw material costs and selling prices. We expect working capital levels to be reduced during the fourth quarter.
2008 Earnings Outlook
"The environment for input costs has changed dramatically over the past three months, but economic conditions continue to be challenging," said Theisen. "While the majority of our products are sold into historically defensive markets for food and consumer products, even those markets can be impacted by changes in consumer buying patterns during difficult economic times. While we are pleased with our current business backlog, we are also mindful of these risks and will carefully manage our resources during this period of uncertainty."
Management expects fourth quarter 2008 diluted earnings per share to be in a range of $0.40 to $0.44, reflecting the ongoing benefits of successful cost management and productivity improvement programs. The capital expenditures forecast continues to be in the $125 million range for 2008.
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, consumer buying patterns under certain economic conditions, the impact of weather conditions on consumer demand, changes in customer order patterns, the results of competitive bid processes, a failure in our information technology infrastructure or applications, foreign currency fluctuations, increased working capital requirements, and availability of bank financing and related costs. 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, 2007.
About The Company
Bemis Company, Inc. will webcast an investor telephone conference regarding its third quarter 2008 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.
Bemis Company is a major supplier of flexible packaging and pressure sensitive materials used by leading food, consumer products, manufacturing, and other companies worldwide. Founded in 1858, the Company reported 2007 net sales of $3.6 billion. The Company's flexible packaging business has a strong technical base in polymer chemistry, film extrusion, coating and laminating, printing and converting. The Company's pressure sensitive materials business specializes in adhesive technologies. Headquartered in Neenah, Wisconsin, Bemis employs about 15,500 individuals in 56 manufacturing facilities in 10 countries around the world. More information about the Company is available at our website, www.bemis.com.
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Net sales $984,258 $905,659 $2,911,499 $2,736,609
Costs and expenses:
Cost of products sold 818,333 744,747 2,410,068 2,221,633
Selling, general and administrative
expenses 85,782 84,041 262,761 256,010
Research and development 6,222 6,501 18,987 19,201
Interest expense 10,242 13,105 30,376 38,248
Other costs (income), net (8,028) (8,608) (26,274) (22,516)
Minority interest in net income 1,944 1,134 4,772 2,812
Income before income taxes 69,763 64,739 210,809 221,221
Provision for income taxes 25,500 23,700 77,800 82,400
Net income $44,263 $41,039 $133,009 $138,821
Basic earnings per share
of common stock $0.44 $0.40 $1.33 $1.34
Diluted earnings per share
of common stock $0.44 $0.40 $1.32 $1.32
Cash dividends paid $0.22 $0.21 $0.66 $0.63
Weighted average common shares
outstanding 99,664 101,945 99,807 103,825
Weighted average common shares and
common stock equivalents outstanding 101,015 102,935 100,920 105,007
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(unaudited)
September 30, December 31,
ASSETS 2008 2007
Cash and cash equivalents $148,924 $147,409
Accounts receivable, net 497,631 448,200
Inventories, net 518,921 478,727
Prepaid expenses 71,388 62,607
Total current assets 1,236,864 1,136,943
Property and equipment, net 1,191,060 1,248,456
Goodwill 627,273 642,507
Other intangible assets, net 91,913 103,756
Deferred charges and other assets 53,578 59,734
Total 772,764 805,997
TOTAL ASSETS $3,200,688 $3,191,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $16,677 $1,758
Short-term borrowings 62,785 66,047
Accounts payable 395,949 384,673
Accrued salaries and wages 78,085 70,248
Accrued income and other taxes 20,279 11,824
Total current liabilities 573,775 534,550
Long-term debt, less current portion 746,850 775,456
Deferred taxes 165,311 155,871
Deferred credits and other liabilities 120,582 124,261
Total liabilities 1,606,518 1,590,138
Minority interest 40,538 38,926
Stockholders' equity:
Common stock issued (117,095,617 and 116,941,126 shares) 11,710 11,694
Capital in excess of par value 341,055 327,387
Retained income 1,588,639 1,523,659
Other comprehensive income (loss) 110,569 171,162
Treasury common stock (17,422,771 and 16,422,771 shares) (498,341) (471,570)
Total stockholders' equity 1,553,632 1,562,332
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,200,688 $3,191,396
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2008 2007
Cash flows from operating activities
Net income $133,009 $138,821
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 124,476 119,260
Minority interest in net income 4,772 2,812
Excess tax benefit from share-based payment arrangements (430) (5,773)
Stock award compensation 13,444 12,490
Deferred income taxes 7,623 10,005
Income of unconsolidated affiliated company (1,301) (787)
Loss (gain) on sales of property and equipment 743 (132)
Non-cash restructuring related activities 0 108
Changes in working capital, net of effects of acquisitions (83,643) (17,413)
Net change in deferred charges and credits 7,847 33,113
Net cash provided by operating activities 206,540 292,504
Cash flows from investing activities
Additions to property and equipment (87,201) (139,742)
Business acquisitions and adjustments, net of cash acquired 0 (97)
Proceeds from sales of property and equipment 1,664 7,650
Net cash used in investing activities (85,537) (132,189)
Cash flows from financing activities
Proceeds from issuance of long-term debt 31,628 12,366
Repayment of long-term debt (282,884) (30,760)
Net borrowing of commercial paper 283,632 132,800
Net borrowing (repayment) of short-term debt (40,836) (2,276)
Cash dividends paid to stockholders (68,029) (67,162)
Common stock purchased for the treasury (26,771) (157,066)
Excess tax benefit from share-based payment arrangements 430 5,773
Stock incentive programs and related withholdings (1,693) (14,745)
Net cash used in financing activities (104,523) (121,070)
Effect of exchange rates on cash and cash equivalents (14,965) 14,076
Net increase in cash and cash equivalents 1,515 53,321
Cash and cash equivalents balance at beginning of year 147,409 112,160
Cash and cash equivalents balance at end of period $148,924 $165,481
BEMIS COMPANY, INC. AND SUBSIDIARIES
OPERATING PROFIT AND PRETAX PROFIT
(in millions)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Flexible Packaging operating profit $82.4 $81.6 $249.7 $263.3
Pressure Sensitive Materials operating profi 9.0 9.1 30.0 33.5
General corporate expenses (9.5) (11.8) (33.7) (34.6)
Interest expense (10.2) (13.1) (30.4) (38.2)
Minority interest in net income (1.9) (1.1) (4.8) (2.8)
Income before income taxes $69.8 $64.7 $210.8 $221.2
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12/1/2011 - Bemis Company Declares Regular Quarterly Dividend
11/3/2011 - Bemis Company Reports 2011 Third Quarter Results
10/26/2011 - Bemis Announces Senior Notes Offering
9/27/2011 - Bemis Company Declares Regular Quarterly Dividend and Announces New Chairman of the Board of Directors
8/5/2011 - Bemis Company Acquires Mayor Packaging Of Hong Kong
8/1/2011 - Bemis Company Reports 2011 Second Quarter Results
7/27/2011
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