Berry Global Group (BERY) Tops Q1 EPS by 4c, Offers Outlook

Berry Global Group (NYSE: BERY) reported Q1 EPS of $0.56, $0.04 better than the analyst estimate of $0.52. Revenue for the quarter came in at $2.8 billion versus the consensus estimate of $2.9 billion.

Outlook

Our fiscal 2020 free cash flow guidance of $800 million includes $1.4 billion of cash flow from operations partially offset by capital expenditures of $600 million. This guidance also includes a use of cash for working capital and other restructuring related costs related to the RPC acquisition of $90 million, along with cash taxes of $160 million and cash interest of $500 million. Based on current interest rates, we will have a tailwind on cash interest, given our recently completed refinancing’s and debt reduction. In addition, if softness in European markets persist, we would anticipate a headwind to our fiscal year earnings forecast.

We continue to work diligently across our businesses to generate sustainable, profitable organic growth by providing advantaged products in targeted markets. We anticipate delivering positive organic base volumes in the March 2020 quarter, with the Consumer Packaging business continuing to grow and our Engineered Materials and Health, Hygiene & Specialties segments continuing their sequential improvement throughout fiscal 2020. Another key strategic objective, post the acquisition of RPC, is to reduce our leverage, as our consistently increasing, dependable, and improving cash flows provide us the opportunity to further improve our balance sheet as we have demonstrated historically.

We believe the acquisition of RPC is truly a transformational and complementary opportunity for our Company and we are off to a solid start with respect to our synergy realization and integration activities. We intend to realize approximately $150 million of annual cost synergies of which an estimated $75 million is expected to be realized in fiscal 2020.

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

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