Commenting on the flexible packaging segment results, Theisen said, “Our flexible packaging sales mix improved during the third quarter with increased sales of high barrier packaging for perishable food products such as meat, cheese, dairy products, liquids, and coffee. The facility consolidation program is improving our cost structure and will continue to provide improvement as the remaining activities are completed in early 2013. Overall unit sales volumes were lower than prior year levels. Our focus continues to be improved efficiencies and growth in high barrier and medical device packaging worldwide.”
PRESSURE SENSITIVE MATERIALS BUSINESS SEGMENTPressure sensitive materials net sales for the third quarter of 2012 were $135.4 million, down 4.5 percent compared to $141.8 million in the third quarter of 2011. The decrease in net sales primarily reflects the negative impact from currency translation of 4.3 percent. Currency translation in this business segment is primarily related to the Euro. For the third quarter of 2012, operating profit was $7.7 million, or 5.7 percent of net sales, compared to operating profit for the third quarter of 2011 of $8.0 million, or 5.6 percent of net sales. The effect of currency translation decreased operating profit in the third quarter of 2012 by $0.5 million compared to the same quarter of 2011.
CAPITAL STRUCTURE AND CASH FLOWNet debt (defined as total debt less cash) to adjusted EBITDA (defined as, for the last twelve month period, adjusted operating income plus depreciation and amortization) was 2.2 times at September 30, 2012. Cash provided by operating activities for the third quarter of 2012 was $146.9 million. During the third quarter of 2012, Bemis acquired two small flexible packaging distributors for the Australian market for a cash price of $19.1 million. Management intends to direct excess cash flow toward debt reduction during the fourth quarter of 2012 in order to reduce the ratio of net debt to adjusted EBITDA toward a target of approximately 2.0 times.
2012 EARNINGS OUTLOOKCommenting on the outlook for the fourth quarter of the year, Theisen said, “We have revised our earnings expectations for the total year to reflect the savings associated with facility consolidation activities completed as of the end of this quarter. Increased sales volume for certain high barrier food packaging is expected to continue to offset the negative impact of lower overall sales volumes, resulting in improved sales mix.”Management expects adjusted diluted earnings per share for the fourth quarter of 2012 to be in the range of $0.47 to $0.52, reflecting normal fourth quarter seasonality. Management expects adjusted diluted earnings per share for the full year 2012 to be in the range of $2.10 to $2.15 per share, reflecting the impact of stronger earnings during the third quarter. Capital expenditures are expected to be approximately $150 million for the full year 2012.