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TheStreet Open House

Bemis Company Reports Record Results For Third Quarter 2012

FACILITY CONSOLIDATIONBemis' facility consolidation program includes the closure of nine manufacturing locations and is designed to improve efficiencies and reduce fixed costs. As of September 30, 2012, four locations have been closed. The remaining consolidation activities are expected to be completed during the fourth quarter of 2012 and the first quarter of 2013. Once completed, this facility consolidation program is expected to save approximately $50 million in annualized costs.

Highlights of the facility consolidation program:

  • Total estimated program cost is expected to be $141 million
    • $38.4 million expensed in 2011
    • $8.3 million expensed in the first quarter of 2012
    • $19.7 million expensed in the second quarter of 2012
    • $21.4 million expensed in the third quarter of 2012 ($2.3 million of employee costs; $19.1 million of fixed asset-related expenses)
    • Approximately $29 million of charges are expected to occur during the fourth quarter of 2012, with about $25 million remaining to be expensed in early 2013.
  • Total cash paid for the program is expected to be approximately $94 million
    • $3.3 million paid in 2011
    • $8.0 million paid in the first quarter of 2012
    • $4.5 million paid in the second quarter of 2012
    • $11.2 million paid in the third quarter of 2012
    • Approximately $24 million expected to be paid during the remainder of 2012
    • Remaining cash expenditures of about $43 million are expected to be paid in 2013

FLEXIBLE PACKAGING BUSINESS SEGMENTNet sales of Bemis' flexible packaging business segment was $1.2 billion, a 5.2 percent decrease from the same period of 2011. The impact of currency translation reduced net sales by 4.7 percent compared to the previous year, primarily reflecting the weaker Brazilian currency. Acquisitions increased 2012 net sales by 1.3 percent. The remaining modest reduction in sales represents the negative impact of lower unit sales volumes partially offset by higher selling prices and improved sales mix.

Segment operating profit for the third quarter of 2012 was $110.3 million, or 9.6 percent of net sales, compared to $117.4 million, or 9.7 percent of net sales, for the same period of 2011. Facility consolidation program and acquisition-related integration costs negatively impacted results during each period. Excluding these costs, segment adjusted operating profit would have been $132.8 million, or 11.5 percent of net sales, for the third quarter of 2012 and $119.1 million, or 9.8 percent of net sales, for the third quarter of 2011. (See attached schedule: “Reconciliation of Non-GAAP Data.”) The effect of currency translation decreased operating profit in the third quarter of 2012 by $3.7 million compared to the same quarter of 2011.

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