Berry Global Group, Inc. (BERY - Free Report) reported weaker-than-expected results for first-quarter fiscal 2019 (ended Dec 29, 2018), with a negative earnings surprise of 21.4%.
The company’s adjusted earnings in the reported quarter were 77 cents per share, lagging the Zacks Consensus Estimate of 98 cents. However, the bottom line increased 14.9% from the year-ago quarter’s number of 67 cents on the back of top-line growth, partially offset by an increase in cost of goods sold.
Segmental Performance Drives Revenues
Berry Global’s first-quarter fiscal 2019 net sales were $1,972 million, reflecting year-over-year growth of 11%. The improvement was driven by 9% gain from acquired assets and 3% growth in organic sales (organic growth includes improved pricing and weak volumes), partially offset by 1% negative impact from unfavorable movements in foreign currencies.
However, the top line lagged the Zacks Consensus Estimate of $2.05 billion.
The company reports revenues under the following segments — Consumer Packaging, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of the segmental sales is provided below:
Consumer Packaging’s sales were roughly $601 million, reflecting year-over-year growth of 9.1%. The improvement was primarily driven by solid demand for foodservice products. It accounted for 30.5% of the reported quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $702 million, increasing 21.7% from the year-ago quarter. It accounted for 35.6% of the reported quarter’s net sales.
Revenues from Engineered Materials increased 3.2% year over year to $669 million. It accounted for 33.9% of the reported quarter’s net sales.
Margin Declines Y/Y
In the reported quarter, Berry Global’s cost of goods sold increased 11.9% year over year to $1,619 million. It represented 82.1% of net sales versus 81.5% in the year-ago quarter. Selling, general and administrative expenses grew 6% year over year to $124 million, and represented 6.3% of net sales.
Adjusted operating income in the quarter under review increased 6.4% year over year to $200 million. Moreover, adjusted operating margin decreased 50 basis points to 10.1%. Interest expenses grew 3.2% year over year to $64 million.
Balance Sheet & Cash Flow
Exiting first-quarter fiscal 2019, Berry Global’s cash and cash equivalents were $293 million, down 23.1% from $381 million recorded in the last reported quarter. Current and long-term debt decreased 1.8% sequentially to $5,737 million. During the quarter under review, the company repaid long-term debt of $110 million.
In the reported quarter, the company generated net cash of $161 million from operating activities, reflecting increase of 5.2% from the year-ago tally. Capital invested for the purchasing of property, plant and equipment totaled $75 million versus $91 million in the year-ago quarter. Adjusted free cash flow in the reported quarter was $70 million, up from $25 million in the year-ago quarter.
During the quarter under review, the company repurchased shares worth $54 million. Exiting the quarter, the company had $411 million of buyback authorization outstanding.
Outlook
For fiscal 2019 (ending Sep 2019), Berry Global reaffirmed cash flow projections. It predicts adjusted free cash flow of approximately $670 million, with cash flow from operations of $1,036 million and capital expenditure of approximately $350 million.
Interest expenses in the fiscal year are predicted to be $270 million while taxes are estimated to be $165 million. Moreover, capital will be used for making acquisitions, investing in organic growth opportunities and buying back shares.
Berry Global Group, Inc. Price, Consensus and EPS Surprise
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Berry Global Group, Inc. (BERY - Free Report) reported weaker-than-expected results for first-quarter fiscal 2019 (ended Dec 29, 2018), with a negative earnings surprise of 21.4%.
The company’s adjusted earnings in the reported quarter were 77 cents per share, lagging the Zacks Consensus Estimate of 98 cents. However, the bottom line increased 14.9% from the year-ago quarter’s number of 67 cents on the back of top-line growth, partially offset by an increase in cost of goods sold.
Segmental Performance Drives Revenues
Berry Global’s first-quarter fiscal 2019 net sales were $1,972 million, reflecting year-over-year growth of 11%. The improvement was driven by 9% gain from acquired assets and 3% growth in organic sales (organic growth includes improved pricing and weak volumes), partially offset by 1% negative impact from unfavorable movements in foreign currencies.
However, the top line lagged the Zacks Consensus Estimate of $2.05 billion.
The company reports revenues under the following segments — Consumer Packaging, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of the segmental sales is provided below:
Consumer Packaging’s sales were roughly $601 million, reflecting year-over-year growth of 9.1%. The improvement was primarily driven by solid demand for foodservice products. It accounted for 30.5% of the reported quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $702 million, increasing 21.7% from the year-ago quarter. It accounted for 35.6% of the reported quarter’s net sales.
Revenues from Engineered Materials increased 3.2% year over year to $669 million. It accounted for 33.9% of the reported quarter’s net sales.
Margin Declines Y/Y
In the reported quarter, Berry Global’s cost of goods sold increased 11.9% year over year to $1,619 million. It represented 82.1% of net sales versus 81.5% in the year-ago quarter. Selling, general and administrative expenses grew 6% year over year to $124 million, and represented 6.3% of net sales.
Adjusted operating income in the quarter under review increased 6.4% year over year to $200 million. Moreover, adjusted operating margin decreased 50 basis points to 10.1%. Interest expenses grew 3.2% year over year to $64 million.
Balance Sheet & Cash Flow
Exiting first-quarter fiscal 2019, Berry Global’s cash and cash equivalents were $293 million, down 23.1% from $381 million recorded in the last reported quarter. Current and long-term debt decreased 1.8% sequentially to $5,737 million. During the quarter under review, the company repaid long-term debt of $110 million.
In the reported quarter, the company generated net cash of $161 million from operating activities, reflecting increase of 5.2% from the year-ago tally. Capital invested for the purchasing of property, plant and equipment totaled $75 million versus $91 million in the year-ago quarter. Adjusted free cash flow in the reported quarter was $70 million, up from $25 million in the year-ago quarter.
During the quarter under review, the company repurchased shares worth $54 million. Exiting the quarter, the company had $411 million of buyback authorization outstanding.
Outlook
For fiscal 2019 (ending Sep 2019), Berry Global reaffirmed cash flow projections. It predicts adjusted free cash flow of approximately $670 million, with cash flow from operations of $1,036 million and capital expenditure of approximately $350 million.
Interest expenses in the fiscal year are predicted to be $270 million while taxes are estimated to be $165 million. Moreover, capital will be used for making acquisitions, investing in organic growth opportunities and buying back shares.
Berry Global Group, Inc. Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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