Bemis (BMS) Earnings In Line, Sales Beat Estimates In Q4

Bemis Company, Inc. (NYSE:BMS) has reported fourth-quarter 2018 adjusted earnings per share of 71 cents, which improved 13% year over year. Earnings were in line with the Zacks Consensus Estimate.

Including one-time costs, Bemis reported earnings of 70 cents per share against a loss of 44 cents in the prior-year quarter.

Operational Update

Net sales edged down 0.07% to $1,002.8 million from $1,003.6 million recorded in the year-ago quarter. The reported figure comfortably beat the Zacks Consensus Estimate of $980 million.

Cost of products sold declined 0.9% year over year to $802 million in the fourth quarter. Gross profit rose 3% year over year to $200 million. Gross margin came in at 20% during the fourth quarter compared with 19.3% recorded in the year-ago quarter.

Selling, general and administrative expenses declined 1.5% to $93.3 million from the year-earlier quarter. Adjusted operating income increased 6.2% year over year to $102.8 million.

Bemis Company, Inc. Price, Consensus and EPS Surprise

Segmental Performance

Net sales in the U.S. Packaging segment climbed 2.7% year over year to $660.4 million. However, the segment’s operating profit inched up 0.4% to $89.7 million from $89.3 million in the prior-year quarter.

Net sales in the Latin America Packaging segment declined around 14.7% year over year to $152.4 million. However, the segment’s operating profit improved to $7.8 million from $6.2 million recorded in the year-ago quarter.

Net sales in the Rest of World Packaging segment increased 4.6% year over year to $190 million. This segment’s operating profit jumped 55% to $23.8 million from $15.4 million in the prior-year quarter.

Financial Update

Bemis reported cash and cash equivalents of $76.1 million at the end of the fourth quarter, up from $71 million recorded at the end of fourth-quarter 2017. Cash flow from operations was $462 million for the 12-month period ended Dec 31, 2018, compared with $379 million recorded in the last year.

Bemis’ net debt decreased to $1.28 billion as of Dec 31, 2018, from $1.49 billion as of Dec 31, 2017.

Agility Plan

Bemis launched an improvement plan called “Agility” in 2017 to fix, strengthen and grow its business. As part of this three-pronged approach, the “fix” aspect involves restructuring and cost-saving plan target of $65 million pre-tax by the end of 2019. Agility-related savings were approximately $9 million during the December-end quarter, in line with the company’s expectations.

Bemis & Amcor Merger

In August 2018, Amcor and Bemis announced the plan to merge their operations in a $6.8-billion all-stock transaction. The merger will create a global leader in consumer packaging. Bemis’ shareholders will benefit from the expected increase in dividend, which nearly doubled from the current dividend rate. This merger will provide $180 million of cost synergies identified as part of the transaction. The company remains on track to close the deal in first-quarter 2019.

2018 Results

Bemis reported adjusted earnings per share of $2.79 in 2018, up 16.7% from $2.39 in the prior year. Earnings came in line with the Zacks Consensus Estimate.

Sales increased 1% year over year to $4.09 billion from $4.05 billion in 2017. The top line beat the Zacks Consensus Estimate of $4.07 billion.

Share Price Performance

Bemis' shares have outperformed its industry with respect to price performance in the past year. The stock gained 6.3% against the industry’s decline of 12.5%.

Zacks Rank & Other Key Picks

The company currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the Industrial Products sector are Axon Enterprise, Inc (NASDAQ:AAXN) , Alarm.com Holdings, Inc. (NASDAQ:ALRM) and EnerSys (NYSE:ENS) . While Axon and Alarm.com currently flaunt a Zacks Rank #1 (Strong Buy), EnerSys carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon has an expected earnings growth rate of 14.5% for 2019. The company’s shares have rallied 97.6% in the past year.

Alarm.com has an expected earnings growth rate of 7.8% for 2019. The stock has climbed 72.1% in a year’s time.

EnerSys has an expected earnings growth rate of 9.5% for 2019. Its shares have gained 22.6% in the past year.

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