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A Look at Bemis Company’s Performance in 2Q16

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Price movement

Bemis Company (BMS) fell by 2.5% to close at $51.04 per share during the fourth week of July 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.5%, 1.8%, and 15.6%, respectively, as of July 29. BMS is trading 2.1% below its 20-day moving average, 0.34% above its 50-day moving average, and 6.1% above its 200-day moving average.

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Related ETF and peers

The Vanguard Materials ETF (VAW) invests 0.68% of its holdings in Bemis. The ETF tracks a very broad market-cap-weighted index of US materials companies. The YTD price movement of VAW was 15.7% on July 29.

The market caps of Bemis’s competitors are as follows:

  • Sealed Air (SEE) — $9.3 billion
  • Avery Dennison (AVY) — $6.9 billion
  • Berry Plastics Group (BERY) — $4.9 billion

Performance of Bemis Company in 2Q16

Bemis Company reported 2Q16 net sales of $1.02 billion, a fall of 0.87% from the net sales of $1.03 billion in 2Q15. Sales of US packaging fell by 3.4%, and sales of global packaging rose by 4.4% between 2Q15 and 2Q16. It reported restructuring and acquisition-related costs of $19.6 million in 2Q16, compared with $0.3 million in 2Q15. The company’s gross profit margin and operating income fell by 1.0% and 18.5%, respectively.

Its net income and EPS (earnings per share) fell to $50.9 million and $0.53, respectively, in 2Q16, compared with $65.6 million and $0.67 in 2Q15. It reported adjusted EPS of $0.67 in 2Q16 and 2Q15.

Bemis’s cash and cash equivalents and inventories rose by 4.4% and 4.8%, respectively, between 4Q15 and 2Q16. Its current ratio and debt-to-equity ratio rose to 2.1x and 1.90x, respectively, in 2Q16, compared with 1.9x and 1.89x in 4Q15.

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New initiatives

The company reported that “During the second quarter of 2016, Bemis initiated a restructuring program in its Global Packaging segment to improve efficiencies and reduce fixed costs. The Company will close four facilities in Latin America by the middle of 2017. A portion of these closures reflect the Company’s synergy plan related to the recent Emplal acquisition to optimize its footprint. Total restructuring costs for this program are estimated to be in the range of $28 to $30 million (at current exchange rates), $13.3 million of which was booked during the second quarter of 2016.”

Projections

The company has made the following projections for fiscal 2016:

  • adjusted EPS in the range of $2.68 to $2.78
  • cash from operations in the range of $425 million to $465 million, which reflects the impact of the timing of working capital improvement initiatives and the restructuring program
  • Capital expenditures of ~$200 million

In the next part, we’ll take a look at J&J Snack Foods.

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