Founded in 1858, Bemis Company Inc. (BMS, Financial) is a major supplier of flexible packaging used by leading food, consumer products, healthcare, and other companies worldwide. The company's business activities are organized around three reportable business segments: U.S. Packaging, Global Packaging (comprises of Latin America, Europe, Asia Pacific, and Healthcare), and Pressure Sensitive Materials (on Nov. 7, 2014, Bemis sold this segment). Over two-thirds of Bemis packaging is used in the food industry, with the balance used in markets including medical, pharmaceutical, chemical and agribusiness.
Bemis has a strong technical base in polymer chemistry, film extrusion, coating and laminating, printing, and converting. The majority of the company's products are sold to customers in the food industry. Headquartered in Neenah, Wisconsin, Bemis has 60 facilities in 11 countries and employs approximately 17,000 individuals worldwide.
BMS recently has been recognised with two Flexible Packaging Association Achievement Awards for its new McCormick Skillet Sauce pouch. This new package earned a gold award in the Packaging Excellence category and a silver award in the Sustainability category.
Strong second-quarter results
Diluted EPS from continuing operations increased by11.7% and was $0.67 per share during the second quarter.
Gross profit as a percentage of net sales improved to 21.5% in the second quarter, (which was 20.0% in the prior year period).
U.S. Packaging segment operating profit return on sales increased to 14.8%, (which was 13.9% in the prior year period).
Global Packaging segment adjusted operating profit return on sales increased to 8.1% 9which were 7.2% in the prior year period).
Adjusted return on invested capital increased to 10.0%, (compared to 9.5% in the previous year).
Cash flow from operations for the first half of 2015 was $218.5 million, compared to $70.4 million for the first half of the prior year. The second quarter contributed $133.3 million of operating cash flow, compared to $57.9 million for the prior second quarter.
Share repurchases
During the second quarter, Bemis repurchased 1.0 million shares, for a total of $45.9 million. At June 30, 2015, the remaining Board authorization for the repurchase of Bemis common stock was 4.9 million shares.
Dividend
BMS declared a regular quarterly cash dividend of 28 cents per share. The dividend is payable September 1, 2015, to shareholders of record at the close of business on August 19, 2015. Bemis has paid an annual dividend on its common stock since 1922 and has been included in Standard & Poor's list of Dividend Aristocrats since 2008.
(Source: Company’s Website)
Expectations for 2015
Full year adjusted diluted earnings per share to be in the range of $2.52 to $2.62.
Capex to be in the range of $200 million to $215 million.
Management expects an effective income tax rate for the full year 2015 of slightly less than 34%.
Strong Attributes of the Second Quarter
- Strong mix of products.
- Diversified strategy.
- Operational excellence.
Focus
The company is focusing on the following:
- Margins improvement.
- Commercialize new products.
- Deliver productivity improvements.
- Execute strong pricing discipline.
Management Expectations
Management expects revenue to grow from $4.3 billion in 2014 to $5.8 billion in 2019, assuming constant currency. Revenue growth through 2019 is anticipated to be equally balanced between organic and inorganic growth. Operating cash flow is forecasted to be approximately $550 million in 2019.
On a Concluding Note
Nowadays, people are becoming more and more health conscious and they demand healthy and fresh food containing fewer preservatives. Consumer trends favour flexible packages over metal cans or glass. The health consciousness of people has created the growth of high-barrier packaging industry. BMS is the leader in this industry. In the global packaging segment, Bemis is expanding consumer markets in Latin America and Asia.
It recently has been recognized by Hormel Foods Corporation with the 2014 Spirit of Excellence Award. Each year, Hormel Foods honours a limited number of suppliers with this well-admired award. Bemis was selected for providing insights and transformational packaging, delivering sales and customer support, and technical service to the plants − which ultimately enables Hormel Foods to succeed in the marketplace.
Bemis has leading market positions, strong innovation pipeline, global footprint, and finally disciplined capital allocation which includes 31 consecutive years of increasing dividend payments, fund organic growth to enhance revenues and returns, and balanced share repurchases. The company’s main strategic objectives are to accelerate growth, focus on innovation, and continuous improvement.
The second quarter 2015 results are a reflection of the company’s continued progress in the implementation of long-term strategy. It recently has been selected for a 2015 DuPont Award for Packaging Innovation, receiving a Silver Award in the Enhanced User Experience category for the BelGioioso resalable provolone cheese package. The DuPont Awards for Packaging Innovation program is the industry’s longest-running, global, independently judged competition that honours innovation and collaboration throughout the entire packaging value chain. Inaugurated in 1986, the DuPont Packaging Awards program is now recognized as the leading packaging awards program in the world.
The company is exhibiting bullish trend and is a long-term stock. I would recommend this company as a buy.
