Berry Global Group (BERY) Tops Q1 EPS by 18c, Revenues Beat; Raises FY21 Fiscal Guidance

February 5, 2021 7:33 AM EST

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Berry Global Group (NYSE: BERY) reported Q1 EPS of $1.12, $0.18 better than the analyst estimate of $0.94. Revenue for the quarter came in at $3.1 billion versus the consensus estimate of $2.9 billion.

First Quarter Highlights

(all comparisons made to the December 2019 quarter)

  • Net sales of $3.1 billion; 7 percent organic volume growth
  • Operating income up 53 percent to $304 million
  • Operating EBITDA up 20 percent to $539 million
  • Net income per diluted share up 174 percent to $0.96
  • Adjusted net income per diluted share increase of 100 percent to $1.12
  • Increased fiscal 2021 organic volume growth assumption by 2 percent, now targeting 4 percent
  • Raised fiscal 2021 operating EBITDA guidance range by $25 million to $2.175 - $2.225 billion
  • Reaffirmed cash flow from operations and free cash flow guidance

Berry’s Chairman and CEO Tom Salmon said, “Berry’s fiscal 2021 is off to an exceptional start with record first quarter financial results exceeding our expectations. Consumer demand for our products remains consistent and certain markets which previously experienced COVID-19 headwinds are rebounding quicker than we expected. All segments delivered strong volume growth, collectively finishing the quarter with 7 percent organic volume growth, while operating EBITDA increased 20 percent in the quarter. The organically driven outperformance in this first fiscal quarter gives us confidence to raise our fiscal year 2021 outlooks for both operating EBITDA and organic volume growth.

“Our businesses, across the globe, are clearly capitalizing on our strategy to drive profitable and sustainable organic volume growth. The continued positive momentum from our investments in areas such as health and wellness, food safety, and e-commerce along with the focus on growing our emerging market exposure, provide us the path to realize long-term consistent volume growth. Couple these drivers with our numerous efforts to drive more sustainable packaging and you have a lot to be excited about in the upcoming years here at Berry.

“With normalized free cash flow of over $1 billion, we have a clear line-of-site to leverage in the 3.8 to 3.9 times range by the end of fiscal 2021. Once within our targeted leverage range of 3.0 to 3.9 times, our consistent and growing cash flow provides substantial capacity to create shareholder value with a balanced capital allocation approach that includes: reinvesting in the business to support continued organic growth, returning capital to shareholders, pursuing bolt-on acquisitions and further debt reductions while staying within our committed range.”

Fiscal 2021 Guidance

We have seen significant cost increases in our primary raw material, resin, along with some modest inflation in other raw material and other costs over the past several months including anticipated February increases. With the strong volume growth momentum in the businesses along with our efforts to improve the timing lag of the pass through of inflation in our customer contracts, we fully intend on passing these transitory increases through. Our updated guidance includes an incremental timing lag of $50 million over the next three quarters related to this incremental inflation. In spite of these challenges, when compared to our initial expectations, given the stronger beginning to the fiscal year and quicker recovery of markets that have been negatively impacted by COVID-19, we are increasing the range of operating EBITDA by $25 million to the new range of $2.175 to $2.225 billion for fiscal year 2021. Furthermore, we are increasing our organic volume growth assumption by 2 percent, and now anticipate volume growth of 4 percent, which is supported by our robust and growing pipeline, increased level of capital expenditures, and the positive trends and momentum we are seeing in each of our businesses. Free cash flow will remain in the range of $875 to $975 million. The range of free cash flow includes $1.525 to $1.625 billion of cash flow from operations, partially offset by capital expenditures of $650 million. Excluding incremental growth capital, our fiscal year 2021 free cash flow is expected to exceed $1 billion. We also continue to anticipate further strengthening our balance sheet and expect our leverage ratio to be 3.8 to 3.9 times at the end of fiscal 2021.

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

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