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Berry Global (BERY) Q4 Earnings & Revenues Top Estimates

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Berry Global Group, Inc. (BERY - Free Report) reported better-than-expected fourth-quarter fiscal 2020 (ended Sep 26, 2020) results. Its earnings surpassed estimates by 28.23% — this being the fifth consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 1.74%.

The company’s adjusted earnings in the reported quarter of $1.59 per share surpassed the Zacks Consensus Estimate of $1.24. Also, the bottom line surged 76.7% from the year-ago number of 90 cents.

In fiscal 2020, the company’s adjusted earnings were $4.85, up 42.2% from the year-ago figure of $3.41.

Revenue Details

In the quarter under review, Berry Global’s net sales were $3,008 million, reflecting year-over-year decline of 0.4%. The decline was attributable to $152 million adverse impacts of a fall in selling prices, partially offset by 4% growth in organic volumes and positive impact of $34 million from favorable movements in foreign currencies.

Notably, the top line surpassed the consensus estimate of $2,957 million.

In fiscal 2020, its net sales came in at $11,709 million, an increase of 31.9% from the year-ago number of $8,878 million.

The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of fiscal fourth-quarter segmental sales is provided below:

Consumer Packaging–International’s sales were $1,071 million compared with $1,077 million in the year-ago quarter. The decrease was attributable to $55 million adverse impacts of a decline in selling prices, partially offset by 1% growth in organic volumes and positive impact of $39 million from favorable movements in foreign currencies. It accounted for 35.6% of the quarter’s net sales.

Consumer Packaging–North America’s sales were $746 million, up 0.3% year over year. The increase was attributable to 6% rise in organic volumes, partially offset by $43 million adverse impacts of a decline in selling prices. It accounted for 24.8% of the quarter’s net sales.

Revenues generated from Health, Hygiene & Specialties amounted to $604 million, up 6% year over year. The improvement was driven by 12% increase in organic volumes, partially offset by adverse impact of $19 million from lower selling prices and divestiture. It accounted for 20.1% of the quarter’s net sales.

Revenues from Engineered Materials declined 6.5% year over year to $587 million. The fall was due to $35 million adverse impacts of lower selling prices and 1% of volume decline. It accounted for 19.5% of the quarter’s net sales.

Berry Global Group, Inc. Price, Consensus and EPS Surprise

Berry Global Group, Inc. Price, Consensus and EPS Surprise

Berry Global Group, Inc. price-consensus-eps-surprise-chart | Berry Global Group, Inc. Quote

Margin Profile

In the fiscal fourth quarter, Berry Global’s cost of goods sold decreased 6.7% to $2,342 million. It represented 77.9% of net sales compared with 83.2% in the year-ago quarter. Selling, general and administrative expenses rose 10.1% to $219 million and represented 7.3% of net sales.

Adjusted operating income in the quarter increased 33.7% to $385 million. Also, adjusted operating margin came in at 12.8%, up 330 basis points year over year. Net interest expenses were $96 million, down 25%.

Balance Sheet & Cash Flow

Exiting fiscal 2020, Berry Global’s cash and cash equivalents were $750 million, down 17.2% from $906 million in the previous quarter. Current and long-term debt decreased 4.9% to $10,237 million sequentially.

In fiscal 2020, the company repaid $2,436 million of borrowings. Its proceeds from borrowings totaled $1,202 million.

In the reported quarter, it generated net cash of $552 million from operating activities, down 12.4% from the year-ago quarter. Capital expenditure totaled $165 million, increasing 28.9% from $128 million spent in the year-ago quarter. Free cash flow in the quarter declined 19.4% to $387 million.

Outlook

For fiscal 2021 (ending September 2021), Berry Global anticipates to generate organic sales growth of 2% on a year-over-year basis, with operating EBITDA in the range of $2.15-$2.2 billion.

For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,525-$1,625 million and capital expenditure of $650 million.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Industrial Products sector are Packaging Corporation of America (PKG - Free Report) , Sealed Air Corporation (SEE - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) . While Packaging Corporation currently sports a Zacks Rank #1 (Strong Buy), Sealed Air and Franklin Electric carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Packaging Corporation delivered a positive earnings surprise of 12.06%, on average, in the trailing four quarters.

Sealed Air delivered a positive earnings surprise of 23.07%, on average, in the trailing four quarters.

Franklin Electric delivered a positive earnings surprise of 12.82%, on average, in the trailing four quarters.

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