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Berry Plastics (BERY) Q3 Earnings Surpass, Revenues Lag
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Berry Plastics Group, Inc. (BERY - Free Report) posted third-quarter fiscal 2016 (ended Jul 2, 2016) results with adjusted earnings per share of 82 cents in the quarter improving around 61% year over year. Earnings effortlessly beat the Zacks Consensus Estimate of 60 cents.
Including one-time items, the company posted earnings of 76 cents per share, an improvement from loss per share of 11 cents earned in the year-ago quarter.
Berry Plastics reported record sales of $1.65 billion in the quarter, up 33% from $1.24 billion in the year-ago period. The top line, however, lagged the Zacks Consensus Estimate of $1.67 billion. The year-over-year increase was primarily attributed to net sales from the AVINTIV buyout, partially offset by a decline in volume, selling prices and negative impact from foreign currency changes.
Operational Update
Cost of sales jumped 29% to $1.3 billion from $1 billion in third-quarter fiscal 2015. Gross profit surged 47% year over year to $349 million. Gross margin increased 200 basis points (bps) to 21.2% in the quarter.
Selling, general and administrative expenses went up 40% year over year to $129 million. Adjusted operating income came in at $220 million, up from $146 million in the year-ago quarter, leading to a 160 bps expansion in operating margin to 13.4%. Benefits from Avintiv acquisition, favorable product mix and price/cost spread, including contributions from sourcing synergies and reduction in business integration expenses were offset by an increase in depreciation and amortization expense, base volume declines and rise in manufacturing costs.
Segmental Performance
Net sales from the Consumer Packaging segment were $705 million, compared with $731 million in the year-ago quarter. Nevertheless, operating profit went down roughly 16% to $63 million from $75 million in the year-ago quarter.
The Health, Hygiene, & Specialties segment reported revenues of $567 million, significantly higher than $122 million recorded in the year-earlier quarter. Operating earnings increased considerably to $61 million from $7 million in the year-ago quarter.
The Engineered Materials segment’s sales fell 4% year over year to $373 million. However, operating income was up 41% year over year to $55 million.
Berry Plastics ended the quarter with cash and cash equivalents of $236 million versus $228 million as of Sep 26, 2015. The company reported cash from operations of $567 million in the three-month period ending Jul 2, 2016, compared with $392 million in the comparable year-ago quarter. Total debt was $5.88 billion as of Jul 2, 2016, compared with $3.69 billion as of Sep 26, 2015.
Outlook
Backed by a strong fiscal third-quarter performance, Berry Plastics raised its Operating EBITDA guidance to $1,200 million for fiscal 2016. Adjusted free cash is projected at $475 million, with the forecasted improvement in operating EBITDA being countered primarily by incremental cash taxes and the timing of interest payments.
Evansville, IN-based Berry Plastics Group makes and sells plastic consumer packaging and engineered materials in the U.S., Canada, Mexico and several other markets around the world. The company sells its products to specialty businesses through its direct field sales force and distributors.
Peer Performance
Sealed Air Corporation’s (SEE - Free Report) reported second-quarter 2016 adjusted earnings per share of 65 cents that improved 2% year over year. The figure beat the Zacks Consensus Estimate by a penny, delivering a positive surprise of 2%.
Sonoco Products Co. (SON - Free Report) reported second-quarter 2016 adjusted earnings of 73 cents per share, ahead of the Zacks Consensus Estimate of 68 cents as well as management’s guidance range of 65–70 cents. On a year-over-year basis, earnings advanced 7% from the year-ago level of 63 cents.
Berry Plastics currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the sector is Packaging Corporation of America (PKG - Free Report) , carrying a Zacks Rank #2 (Buy).
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Berry Plastics (BERY) Q3 Earnings Surpass, Revenues Lag
Berry Plastics Group, Inc. (BERY - Free Report) posted third-quarter fiscal 2016 (ended Jul 2, 2016) results with adjusted earnings per share of 82 cents in the quarter improving around 61% year over year. Earnings effortlessly beat the Zacks Consensus Estimate of 60 cents.
Including one-time items, the company posted earnings of 76 cents per share, an improvement from loss per share of 11 cents earned in the year-ago quarter.
Berry Plastics reported record sales of $1.65 billion in the quarter, up 33% from $1.24 billion in the year-ago period. The top line, however, lagged the Zacks Consensus Estimate of $1.67 billion. The year-over-year increase was primarily attributed to net sales from the AVINTIV buyout, partially offset by a decline in volume, selling prices and negative impact from foreign currency changes.
Operational Update
Cost of sales jumped 29% to $1.3 billion from $1 billion in third-quarter fiscal 2015. Gross profit surged 47% year over year to $349 million. Gross margin increased 200 basis points (bps) to 21.2% in the quarter.
Selling, general and administrative expenses went up 40% year over year to $129 million. Adjusted operating income came in at $220 million, up from $146 million in the year-ago quarter, leading to a 160 bps expansion in operating margin to 13.4%. Benefits from Avintiv acquisition, favorable product mix and price/cost spread, including contributions from sourcing synergies and reduction in business integration expenses were offset by an increase in depreciation and amortization expense, base volume declines and rise in manufacturing costs.
Segmental Performance
Net sales from the Consumer Packaging segment were $705 million, compared with $731 million in the year-ago quarter. Nevertheless, operating profit went down roughly 16% to $63 million from $75 million in the year-ago quarter.
The Health, Hygiene, & Specialties segment reported revenues of $567 million, significantly higher than $122 million recorded in the year-earlier quarter. Operating earnings increased considerably to $61 million from $7 million in the year-ago quarter.
The Engineered Materials segment’s sales fell 4% year over year to $373 million. However, operating income was up 41% year over year to $55 million.
BERRY PLASTICS Price, Consensus and EPS Surprise
BERRY PLASTICS Price, Consensus and EPS Surprise | BERRY PLASTICS Quote
Financial Update
Berry Plastics ended the quarter with cash and cash equivalents of $236 million versus $228 million as of Sep 26, 2015. The company reported cash from operations of $567 million in the three-month period ending Jul 2, 2016, compared with $392 million in the comparable year-ago quarter. Total debt was $5.88 billion as of Jul 2, 2016, compared with $3.69 billion as of Sep 26, 2015.
Outlook
Backed by a strong fiscal third-quarter performance, Berry Plastics raised its Operating EBITDA guidance to $1,200 million for fiscal 2016. Adjusted free cash is projected at $475 million, with the forecasted improvement in operating EBITDA being countered primarily by incremental cash taxes and the timing of interest payments.
Evansville, IN-based Berry Plastics Group makes and sells plastic consumer packaging and engineered materials in the U.S., Canada, Mexico and several other markets around the world. The company sells its products to specialty businesses through its direct field sales force and distributors.
Peer Performance
Sealed Air Corporation’s (SEE - Free Report) reported second-quarter 2016 adjusted earnings per share of 65 cents that improved 2% year over year. The figure beat the Zacks Consensus Estimate by a penny, delivering a positive surprise of 2%.
Sonoco Products Co. (SON - Free Report) reported second-quarter 2016 adjusted earnings of 73 cents per share, ahead of the Zacks Consensus Estimate of 68 cents as well as management’s guidance range of 65–70 cents. On a year-over-year basis, earnings advanced 7% from the year-ago level of 63 cents.
Berry Plastics currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the sector is Packaging Corporation of America (PKG - Free Report) , carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>