Berry Plastics Group (BERY) Misses Q3 EPS by 9c, Revenues In-Line; Offers FY18 Cash Flow Guidance

Berry Plastics Group (NYSE: BERY) reported Q3 EPS of $0.96, $0.09 worse than the analyst estimate of $1.05. Revenue for the quarter came in at $2.07 billion versus the consensus estimate of $2.07 billion.

(all comparisons made to the June 2017 quarter)

• Net income per diluted share up 3 percent to $0.81.
• Adjusted net income per diluted share up 7 percent to $0.96.
• Net sales increased 9 percent to $2.1 billion.
• Operating income increased by 2 percent to $216 million.
• Operating EBITDA was $374 million, an increase of 3 percent.
• Announced authorization of new $500 million share repurchase program
• Reaffirmed adjusted free cash flow guidance of $630 million for fiscal year 2018; including cash flow from operations of $987 million partially offset by net capital expenditures of $320 million and tax receivable payment of $37 million.

Commenting on the quarter, Tom Salmon, Chairman and Chief Executive Officer of Berry stated, “During the quarter we reported record net sales of $2.1 billion, growth of 9 percent compared to the prior year quarter. Additionally, we had quarterly records for operating EBITDA and adjusted earnings per share of $374 million and $0.96, respectively."

“Specifically by segment, Consumer Packaging reported strong net sales and organic volume growth of 7 percent and 4 percent, respectively in the quarter, which was led by our foodservice products driven by stronger demand at quick service restaurants and convenience stores. Within our Health, Hygiene & Specialties division we recorded strong revenue growth of 20 percent as well as an 11 percent improvement in Operating EBITDA, including the impact of the recently completed acquisition of Clopay. Inside our Engineered Materials division, we recorded modest positive organic volume growth in our legacy business led by our tape and flexible packaging products.”

Mr. Salmon continued, “Berry’s financial performance and balance sheet have strengthened considerably over the past several years. We are now in a position to return cash to shareholders while still maintaining financial flexibility to execute our strategic plan, further strengthen our balance sheet, and invest for future growth. I am happy to announce that Berry’s Board of Directors have approved a $500 million share repurchase program.”

GUIDANCE:

Today we are reaffirming our fiscal year 2018 adjusted free cash flow guidance of $630 million. This includes cash flow from operations of $987 million partially offset by net capital expenditures of $320 million and the $37 million tax receivable payment that was made in the Company’s first fiscal quarter. This guidance includes a reduction to capital spending of $20 million along with a total $30 million of lower cash taxes and other cash costs. The earnings reduction is being driven by ongoing cost inflation versus the timing lag of passing along these cost increases. We are extremely proud of our history and predictability and have a proven track record of generating growth in annual free cash flow through various economic cycles and market conditions.

For earnings history and earnings-related data on Berry Plastics Group (BERY) click here.

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