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Berry Global (BERY) Q2 Earnings Beat Estimates, Revenues Miss
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Berry Global Group, Inc. (BERY - Free Report) reported second-quarter fiscal 2024 (ended March 2024) adjusted earnings of $1.95 per share, which beat the Zacks Consensus Estimate of $1.90. The bottom line decreased 0.5% year over year.
Net sales of $3.07 billion missed the consensus estimate of $3.12 billion. The top line decreased 6.4% year over year due to a 2% dip in volumes and a 5% negative impact from lower resin costs.
Berry Global’s cost of goods sold decreased 6.5% to $2.5 billion. Selling, general and administrative expenses decreased 3.2% year over year to $213 million. The company reported an operating EBITDA of $522 million, down 4% year over year. Adjusted operating income decreased 9.7% to $308 million.
Segmental Discussion
Berry Global has announced its plan to go for a tax-free spin-off and merge the majority of its Health, Hygiene and Specialties segment (comprising the global nonwovens and films business) with Glatfelter Corporation (GLT - Free Report) . With this announcement and its focus on driving a positive product mix within the Engineered Materials segment into higher value products, BERY renamed the unit Flexibles.
Consumer Packaging - International sales amounted to $968.0 million (accounting for 31.5% of total sales), down 8.6% from the year-ago quarter’s figure. Our estimate for segmental revenues was $1 billion. The decline was due to the pass-through of lower resin prices and the impact of completed divestitures. Operating income of $3 million decreased 96% year over year.
Consumer Packaging - North America’s sales totaled $751.0 million (accounting for 24.4% of total sales) in the segment, down 3% year over year due to a 3% decline in volumes. Our estimate for segmental revenues was $764.6 million. Operating income declined 17.2% year over year to $77.0 million.
Revenues from the Health, Hygiene & Specialties segment amounted to $646.0 million (accounting for 21% of total sales), down 4.6% year over year due to a 2% decrease in volumes as a result of lower demand in hygiene and specialty markets. Our estimate for segmental revenues was $642.1 million. It reported operating income of $33.0 million, down 2.9% from the year-ago quarter.
Revenues from the Flexibles segment amounted to $711.0 million (accounting for 23.1% of total sales), down 8.6% year over year due to a 4% decrease in volumes as a result of softer demand in North American markets. Our estimate for segmental revenues was $704.4 million. Operating income was $95 million, down 4% year over year.
Berry Global Group, Inc. Price, Consensus and EPS Surprise
At the end of the second quarter, Berry Global had cash and cash equivalents of $494 million compared with $1.2 billion at the end of fiscal 2023. Current and long-term debt totaled $8.7 billion compared with $9 billion at the end of fiscal 2023.
Berry Global did not generate any cash from operating activities in the second quarter. However, BERY used cash worth $233 million in the year-ago period. Capital expenditure totaled $333 million compared with $385 million in the prior-year quarter. In the first six months of fiscal 2024, the company reported a negative adjusted free cash flow of $333 million compared with a negative cash flow of $217 million in the year-ago period.
BERY repurchased 1.4 million shares for approximately $81 million. It also paid dividends worth $70 million in the first six months of fiscal 2024.
Fiscal 2024 Guidance
Berry Global reaffirmed its outlook. It continues to expect adjusted earnings to be in the range of $7.35-$7.85 per share in fiscal 2024.
BERY expects cash flow from operations to be in the band of $1.35-$1.45 billion. It continues to anticipate free cash flow in the $800-$900 million range. The company remains committed to debt reduction along with returning capital to shareholders through share repurchases and dividends.
IDEX Corporation’s (IEX - Free Report) second-quarter adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) second-quarter adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
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Berry Global (BERY) Q2 Earnings Beat Estimates, Revenues Miss
Berry Global Group, Inc. (BERY - Free Report) reported second-quarter fiscal 2024 (ended March 2024) adjusted earnings of $1.95 per share, which beat the Zacks Consensus Estimate of $1.90. The bottom line decreased 0.5% year over year.
Net sales of $3.07 billion missed the consensus estimate of $3.12 billion. The top line decreased 6.4% year over year due to a 2% dip in volumes and a 5% negative impact from lower resin costs.
Berry Global’s cost of goods sold decreased 6.5% to $2.5 billion. Selling, general and administrative expenses decreased 3.2% year over year to $213 million. The company reported an operating EBITDA of $522 million, down 4% year over year. Adjusted operating income decreased 9.7% to $308 million.
Segmental Discussion
Berry Global has announced its plan to go for a tax-free spin-off and merge the majority of its Health, Hygiene and Specialties segment (comprising the global nonwovens and films business) with Glatfelter Corporation (GLT - Free Report) . With this announcement and its focus on driving a positive product mix within the Engineered Materials segment into higher value products, BERY renamed the unit Flexibles.
Consumer Packaging - International sales amounted to $968.0 million (accounting for 31.5% of total sales), down 8.6% from the year-ago quarter’s figure. Our estimate for segmental revenues was $1 billion. The decline was due to the pass-through of lower resin prices and the impact of completed divestitures. Operating income of $3 million decreased 96% year over year.
Consumer Packaging - North America’s sales totaled $751.0 million (accounting for 24.4% of total sales) in the segment, down 3% year over year due to a 3% decline in volumes. Our estimate for segmental revenues was $764.6 million. Operating income declined 17.2% year over year to $77.0 million.
Revenues from the Health, Hygiene & Specialties segment amounted to $646.0 million (accounting for 21% of total sales), down 4.6% year over year due to a 2% decrease in volumes as a result of lower demand in hygiene and specialty markets. Our estimate for segmental revenues was $642.1 million. It reported operating income of $33.0 million, down 2.9% from the year-ago quarter.
Revenues from the Flexibles segment amounted to $711.0 million (accounting for 23.1% of total sales), down 8.6% year over year due to a 4% decrease in volumes as a result of softer demand in North American markets. Our estimate for segmental revenues was $704.4 million. Operating income was $95 million, down 4% year over year.
Berry Global Group, Inc. Price, Consensus and EPS Surprise
Berry Global Group, Inc. price-consensus-eps-surprise-chart | Berry Global Group, Inc. Quote
Balance Sheet and Cash Flow
At the end of the second quarter, Berry Global had cash and cash equivalents of $494 million compared with $1.2 billion at the end of fiscal 2023. Current and long-term debt totaled $8.7 billion compared with $9 billion at the end of fiscal 2023.
Berry Global did not generate any cash from operating activities in the second quarter. However, BERY used cash worth $233 million in the year-ago period. Capital expenditure totaled $333 million compared with $385 million in the prior-year quarter. In the first six months of fiscal 2024, the company reported a negative adjusted free cash flow of $333 million compared with a negative cash flow of $217 million in the year-ago period.
BERY repurchased 1.4 million shares for approximately $81 million. It also paid dividends worth $70 million in the first six months of fiscal 2024.
Fiscal 2024 Guidance
Berry Global reaffirmed its outlook. It continues to expect adjusted earnings to be in the range of $7.35-$7.85 per share in fiscal 2024.
BERY expects cash flow from operations to be in the band of $1.35-$1.45 billion. It continues to anticipate free cash flow in the $800-$900 million range. The company remains committed to debt reduction along with returning capital to shareholders through share repurchases and dividends.
Zacks Rank
BERY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Industrial Companies
IDEX Corporation’s (IEX - Free Report) second-quarter adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) second-quarter adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.