Founded in 1858, Bemis Company Inc. (BMS, Financial) is a global supplier of flexible packaging used by food, consumer products, healthcare and other companies.
The company's business activities have been organized around three reportable business segments: U.S. packaging, global packaging and pressure sensitive materials. More than 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 worldwide.
The company delivered a record fourth quarter. The company is building toward its long-term financial targets and is poised to grow. A strong mix of products and operational excellence delivered margin improvement across the entire business. The company witnessed overall unit volume growth in the global packaging business, offset by light volume in its U.S. packaging business. It continues to improve sales mix and invest capital strategically for growth and productivity projects.
The company reported strong fourth-quarter and full-year results. The fourth-quarter results are a reflection of the company’s continued progress in the implementation of long-term strategy. The company is bullish and a long-term stock. It is consistently increasing margins, return on invested capital and cash from operations. It achieved record adjusted earnings per share, a double-digit percentage increase.
Fourth-quarter and full-year results
Fourth-quarter 2015 diluted earnings per share from continuing operations was 58 cents.
For the full year 2015, the company reported diluted earnings per share from continuing operations of $2.47 ($2.36 per share during the prior-year period).
Cash flow from operations was $552.4 million ($248.1 million in the prior-year period).
The fourth quarter contributed $140.4 million of operating cash flow.
Total company net debt to adjusted EBITDA was 2.3 times as of Dec. 31, 2015.
Capex was $219.4 million for the full year 2015.
During the fourth quarter, Bemis repurchased 1 million shares for a total of $45.8 million. For the full year 2015, the company repurchased 3.3 million shares for $150.1 million. As of Dec. 31, 2015, the remaining board authorization for the repurchase of Bemis common stock was 3.4 million shares.
Adjusted return on invested capital increased to 10.5% during 2015 (9.7% during the prior-year period).
Gross profit margin improved 170 basis points and was 21.5% of net sales for the full year 2015 (19.8% in the prior-year period).
Segmentwise results
U.S. Packaging
U.S. Packaging net sales was $2.75 billion for 2015 (a decrease of 4% from the prior-year period).
U.S. Packaging operating profit increased to $391.8 million in 2015, or 14.3% of net sales ($375.8 million, or 13.1% of net sales, during the prior-year period).
Global Packaging
Global Packaging net sales were $1.32 billion for 2015 (a decrease of 10.7% from the prior-year period).
Global Packaging operating profit was $107.1 million in 2015 ($113.3 million in the prior-year period).
(Source: Company’s website)
Expectations for 2016
The company expects the following:
- Adjusted diluted earnings per share to be in the range of $2.68 to $2.83.
- Full-year cash from operations to be in the range of $450 million to $500 million.
- Capex to be around $200 million.
- Effective income tax rate for 2016 to be slightly above 33%.
Focus
- Commercialize new products.
- Deliver productivity improvements.
- Execute strong pricing discipline.
- Accelerate growth.
- Diversify customer base.
- Broaden product line.
Strong attributes
- Leading market positions.
- Disciplined capital allocation.
- Favorable market positions.
- Relevant product pipeline.
Why do customers choose Bemis?
- Reliable supply; quality product.
- Technology leader with differentiated product.
- Global breadth and scale.
- Longevity and financial stability.
Takeaway
People are becoming more health conscious, and they demand healthy and fresh food with fewer preservatives. Consumer trends favor flexible packages over metal cans or glass. Health consciousness has created the growth of a high-barrier packaging industry. In the Global Packaging segment, Bemis is expanding consumer markets in Latin America and Asia.
Bemis has leading market positions, strong innovation pipeline, global footprint and disciplined capital allocation that includes 31 consecutive years of increasing dividend payments and funding organic growth to enhance revenues and returns and balanced share repurchases. The company’s main strategic objectives are to accelerate growth and focus on innovation and continuous improvement.
In March Bemis received two Flexible Packaging Association Achievement Awards for its McCormick Skillet Sauce pouch. It earned a gold award in the packaging excellence category and a silver award in the sustainability category.
It was nominated for a 2015 DuPont Award for packaging innovation. It has been recognized by the Flexible Packaging Association during its 60th annual awards program with the Highest Achievement Award for the Campbell’s Ready Meals pouch. Inaugurated in 1986, the DuPont Awards for Packaging Innovation program is the industry’s longest-running, global, independently judged competition that honors innovation and collaboration throughout the entire packaging value chain.
Disclosure: I do not hold any position in the company.
