Berry Global Group, Inc. Reports Third Fiscal Quarter 2022 Results
Berry Global Group, Inc. (NYSE:BERY) reported its third fiscal quarter 2022 results, achieving net sales of $3.7 billion, up 6% year-over-year. Operating income was $336 million, with adjusted earnings per share (EPS) at $2.03, a 10% increase. Share repurchases totaled $637 million year-to-date, reducing total shares outstanding by 8%. The company expects adjusted EPS of $7.40 for fiscal 2022 and free cash flow of $750 million. CEO Tom Salmon emphasized resilience in demand and commitment to managing costs amid inflationary pressures.
- Net sales reached $3.7 billion, representing a 6% increase.
- Adjusted EPS rose 10% to $2.03, marking a quarterly record.
- Share repurchases of $637 million year-to-date, reducing shares outstanding by 8%.
- Expecting fiscal 2022 adjusted EPS of $7.40 and free cash flow of $750 million.
- Operating income decreased to $336 million from $343 million year-over-year.
- Volume decline of 4% in the Engineered Materials segment attributed to market softness.
- Negative product mix and inflation lag contributed to declines in the Health, Hygiene & Specialties segment.
Third Fiscal Quarter Highlights
(all comparisons made to the
-
Net sales of
, up$3.7 billion 6% on comparable basis -
Operating income of
; Operating EBITDA of$336 million , up$550 million 2% on comparable basis -
Earnings per share of
; Adj. earnings per share of$1.58 , up$2.03 10% on comparable basis -
of share repurchases year-to-date, an$637 million 8% reduction in total shares outstanding -
Fiscal 2022 adjusted earnings per share target of
and free cash flow target of$7.40 $750 million
Berry’s Chairman and CEO
“Our consistent and dependable free cash flow, accompanied by our large-scale and diverse portfolio, provides a resilient and steady business through any economic cycle. Additionally, we continue to prudently invest in each of our businesses to maintain and grow our world-class, low-cost manufacturing base, with an emphasis on organic growth and key growth markets and regions. The continued positive momentum from our investments in areas such as health and wellness, personal care, and food safety drive our business toward more sustainable packaging solutions and provide us with a path to deliver long-term, consistent, volume and earnings growth.”
Key Financials (1) |
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Quarterly Periods Ended |
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GAAP results (in millions, except per share data) |
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Net sales |
|
|
|
|
|
||||
Operating income |
|
|
|
336 |
343 |
||||
EPS (diluted) |
|
|
|
1.58 |
1.40 |
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Quarterly Periods Ended |
As Reported
|
Comparable
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Adjusted non-GAAP results |
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Reported |
Comparable |
||||||
Net sales |
|
|
|
|
|
||||
Operating EBITDA |
550 |
565 |
540 |
( |
|
||||
Adjusted EPS (diluted) |
2.03 |
1.89 |
1.85 |
|
|
(1) | Adjusted non-GAAP results excludes items not considered to be ongoing operations. In addition, comparable basis change excludes the impacts of foreign currency and recent divestitures. Further details related to non-GAAP measures and reconciliations can be found under our “Non-GAAP Financial Measures and Estimates” section or in reconciliation tables in this release. |
Consolidated Overview
The net sales growth is primarily attributed to increased selling prices of
The operating income decrease is primarily attributed to a
The net sales growth in the
The operating income increase is primarily attributed to a
The net sales growth in the
The operating income increase is primarily attributed to a
Health, Hygiene, & Specialties
The net sales decline in the Health, Hygiene & Specialties segment is primarily attributed to a
The operating income decrease is primarily attributed to a
Engineered Materials
The net sales growth in the Engineered Materials segment is primarily attributed to increased selling prices of
The operating income increase is primarily attributed to a
Capital Allocation
Berry repurchased approximately 11 million shares (approximately
In line with our focus of driving long-term shareholder value, over the past several years, we have divested several small businesses. As we continue to focus on driving maximum shareholder value and alongside our commitment to drive sustainable organic growth, we will continue to optimize our portfolio and believe we have more opportunities, over the next few years, to further elevate and strengthen our portfolio. Given our consistent and dependable free cash flow along with strategic divestiture opportunities we expect to continue to provide capital back to our shareholders along with lowering our leverage. So far this year we have completed three divestitures delivering proceeds of approximately
Outlook for Fiscal Year 2022
|
Fiscal 2022 Target | ||||
Adjusted earnings per diluted share |
$ |
7.40 |
|||
Free cash flow |
$ |
750 million |
Berry is now targeting fiscal 2022 adjusted earnings per share of
Salmon added, “We are pleased with the hard work delivered by our employees around the world, delivering solid quarterly results in the face of persistently higher operating costs and a continuously changing economy. We are committed to recovering inflation and continue to see supply chain improvements along with the onboarding of new business and capital investments. Our guidance for the year includes returning
Investor Conference Call
The Company will host a conference call today,
About Berry
At
Non-GAAP Financial Measures and Estimates
This press release includes non-GAAP financial measures such as operating EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted earnings per share, free cash flow, and comparable basis net sales, adjusted EPS and operating EBITDA. A reconciliation of these non-GAAP financial measures to comparable measures determined in accordance with accounting principles generally accepted in
Forward Looking Statements
Statements in this release that are not historical, including statements relating to the expected future performance of the Company, are considered “forward looking” within the meaning of the federal securities laws and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “outlook,” “anticipates” or “looking forward,” or similar expressions that relate to our strategy, plans, intentions, or expectations. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.
Our actual results may differ materially from those that we expected due to a variety of factors, including without limitation: (1) risks associated with our substantial indebtedness and debt service; (2) changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices to our customers on a timely basis; (3) risks related to acquisitions or divestitures and integration of acquired businesses and their operations, and realization of anticipated cost savings and synergies; (4) risks related to international business, including foreign currency exchange rate risk and the risks of compliance with applicable export controls, sanctions, anti-corruption laws and regulations; (5) increases in the cost of compliance with laws and regulations, including environmental, safety, and climate change laws and regulations; (6) labor issues, including the potential labor shortages, shutdowns or strikes, or the failure to renew effective bargaining agreements; (7) risks related to disruptions in the overall economy, persistent inflation, supply chain disruptions, and the financial markets that may adversely impact our business, including as a result of the COVID-19 pandemic; (8) risk of catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions; (9) risks related to the failure of, inadequacy of, or attacks on our information technology systems and infrastructure; (10) risks that our restructuring programs may entail greater implementation costs or result in lower cost savings than anticipated; (11) risks related to future write-offs of substantial goodwill; (12) risks of competition, including foreign competition, in our existing and future markets; (13) risks related to market conditions associated with our share repurchase program; (14) risks related to market disruptions and increased market volatility as a result of Russia’s invasion of
Consolidated Statements of Income (Unaudited) (in millions of dollars, except per share data amounts) |
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|
Quarterly Period Ended |
|
Three Quarterly Periods Ended |
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|
|
|
|
|
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|
|||||
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|
|
|
|
|
|
|
|||||
Net sales |
$ |
3,726 |
|
$ |
3,675 |
|
$ |
11,074 |
|
$ |
10,181 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|||||
Cost of goods sold |
|
3,105 |
|
|
3,049 |
|
|
9,297 |
|
|
8,273 |
|
Selling, general and administrative |
|
215 |
|
|
207 |
|
|
657 |
|
|
668 |
|
Amortization of intangibles |
|
63 |
|
|
72 |
|
|
196 |
|
|
219 |
|
Restructuring and transaction activities |
|
7 |
|
|
4 |
|
|
18 |
|
|
41 |
|
Operating income |
|
336 |
|
|
343 |
|
|
906 |
|
|
980 |
|
|
|
|
|
|
|
|
|
|||||
Other expense |
|
7 |
|
|
14 |
|
|
13 |
|
|
45 |
|
Interest expense |
|
70 |
|
|
76 |
|
|
212 |
|
|
257 |
|
Income before income taxes |
|
259 |
|
|
253 |
|
|
681 |
|
|
678 |
|
Income tax expense |
|
52 |
|
|
59 |
|
|
148 |
|
|
173 |
|
Net income |
$ |
207 |
|
$ |
194 |
|
$ |
533 |
|
$ |
505 |
|
|
|
|
|
|
|
|
|
|||||
Net income per share: |
|
|
|
|
|
|
|
|||||
Basic |
$ |
1.61 |
|
$ |
1.44 |
|
$ |
4.02 |
|
$ |
3.76 |
|
Diluted |
|
1.58 |
|
|
1.40 |
|
|
3.93 |
|
|
3.67 |
|
|
|
|
|
|
|
|
|
|||||
Outstanding weighted-average shares: (in millions) |
|
|
|
|
|
|
|
|||||
Basic |
|
128.6 |
|
|
135.1 |
|
|
132.6 |
|
|
134.3 |
|
Diluted |
|
130.7 |
|
|
138.5 |
|
|
135.6 |
|
|
137.7 |
Condensed Consolidated Balance Sheets (Unaudited) (in millions of dollars) |
|||||
|
|
|
|
||
Assets: |
|
|
|
||
Cash and cash equivalents |
$ |
527 |
|
$ |
1,091 |
Accounts receivable |
|
1,974 |
|
|
1,879 |
Inventories |
|
1,978 |
|
|
1,828 |
Other current assets |
|
237 |
|
|
217 |
Property, plant, and equipment |
|
4,560 |
|
|
4,756 |
|
|
7,609 |
|
|
8,111 |
Total assets |
$ |
16,885 |
|
$ |
17,882 |
|
|
|
|
||
Liabilities and Stockholders' Equity: |
|
|
|
||
Current liabilities, excluding debt |
$ |
2,615 |
|
$ |
3,165 |
Current and long-term debt |
|
9,503 |
|
|
9,460 |
Other long-term liabilities |
|
1,658 |
|
|
2,077 |
Stockholders’ equity |
|
3,109 |
|
|
3,180 |
Total liabilities and stockholders' equity |
$ |
16,885 |
|
$ |
17,882 |
Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions of dollars) |
|||||||
|
Three Quarterly Periods Ended |
||||||
|
|
|
|
||||
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
533 |
|
|
$ |
505 |
|
Adjustments to reconcile net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
424 |
|
|
|
420 |
|
Amortization of intangibles |
|
196 |
|
|
|
219 |
|
Non-cash interest |
|
11 |
|
|
|
26 |
|
Deferred income tax |
|
(66 |
) |
|
|
(53 |
) |
Share-based compensation expense |
|
34 |
|
|
|
34 |
|
Settlement of derivatives |
|
69 |
|
|
|
- |
|
Other non-cash operating activities, net |
|
(2 |
) |
|
|
60 |
|
Changes in working capital |
|
(854 |
) |
|
|
(299 |
) |
Net cash from operating activities |
|
345 |
|
|
|
912 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Additions to property, plant, and equipment, net |
|
(556 |
) |
|
|
(520 |
) |
Other |
|
6 |
|
|
|
- |
|
Divestiture of businesses |
|
125 |
|
|
|
165 |
|
Net cash from investing activities |
|
(425 |
) |
|
|
(355 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Repayments on long-term borrowings |
|
(16 |
) |
|
|
(3,287 |
) |
Proceeds from long-term borrowings |
|
170 |
|
|
|
2,716 |
|
Proceeds from issuance of common stock |
|
24 |
|
|
|
57 |
|
Debt financing costs |
|
- |
|
|
|
(20 |
) |
Repurchase of common stock |
|
(637 |
) |
|
|
- |
|
Net cash from financing activities |
|
(459 |
) |
|
|
(534 |
) |
Effect of currency translation on cash |
|
(25 |
) |
|
|
31 |
|
Net change in cash and cash equivalents |
|
(564 |
) |
|
|
54 |
|
Cash and cash equivalents at beginning of period |
|
1,091 |
|
|
|
750 |
|
Cash and cash equivalents at end of period |
$ |
527 |
|
$ |
804 |
Condensed Consolidated Financial Statements Segment and Supplemental Comparable Basis Information (Unaudited) (in millions of dollars) |
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|
Quarterly Period Ended |
|||||||||||||||||
|
Consumer
|
|
Consumer
|
|
Health,
|
|
Engineered
|
|
Total |
|||||||||
Net sales |
$ |
1,096 |
|
|
$ |
927 |
|
$ |
788 |
|
|
$ |
915 |
|
|
$ |
3,726 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income |
$ |
82 |
|
|
$ |
104 |
|
$ |
56 |
|
|
$ |
94 |
|
|
$ |
336 |
|
Depreciation and amortization |
|
78 |
|
|
|
53 |
|
|
44 |
|
|
|
28 |
|
|
|
203 |
|
Restructuring and transaction activities (1) |
|
3 |
|
|
|
1 |
|
|
3 |
|
|
|
— |
|
|
|
7 |
|
Other non-cash charges |
|
— |
|
|
|
1 |
|
|
2 |
|
|
|
1 |
|
|
|
4 |
|
Operating EBITDA |
$ |
163 |
|
|
$ |
159 |
|
$ |
105 |
|
|
$ |
123 |
|
|
$ |
550 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Quarterly Period Ended |
|||||||||||||||||
|
Consumer
|
|
Consumer
|
|
Health,
|
|
Engineered
|
|
Total |
|||||||||
Reported Net sales |
$ |
1,095 |
|
$ |
847 |
|
$ |
828 |
|
$ |
905 |
|
|
$ |
3,675 |
|
||
Foreign currency and divestitures |
|
(115 |
) |
|
|
— |
|
|
(17 |
) |
|
|
(35 |
) |
|
|
(167 |
) |
Comparable Net sales (2) |
$ |
980 |
|
|
$ |
847 |
|
$ |
811 |
|
|
$ |
870 |
|
|
$ |
3,508 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income |
$ |
79 |
|
|
$ |
76 |
|
$ |
113 |
|
|
$ |
75 |
|
|
$ |
343 |
|
Depreciation and amortization |
|
88 |
|
|
|
53 |
|
|
43 |
|
|
|
28 |
|
|
|
212 |
|
Restructuring and transaction activities (1) |
|
3 |
|
|
|
— |
|
|
— |
|
|
|
1 |
|
|
|
4 |
|
Other non-cash charges |
|
2 |
|
|
|
2 |
|
|
1 |
|
|
|
1 |
|
|
|
6 |
|
Reported Operating EBITDA |
$ |
172 |
|
|
$ |
131 |
|
$ |
157 |
|
|
$ |
105 |
|
|
$ |
565 |
|
Foreign currency and divestitures |
|
(18 |
) |
|
|
— |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(25 |
) |
Comparable Operating EBITDA (2) |
$ |
154 |
|
|
$ |
131 |
|
$ |
154 |
|
|
$ |
101 |
|
|
$ |
540 |
|
|
|
|
|
|
|
|
|
|
|
(1) | Primarily includes transaction activity costs related to the RPC acquisition. |
|
|
||
Note: For comparison purposes to the |
||
|
||
(2) | In addition, the prior year comparable basis change excludes the impacts of foreign currency and recent divestitures. Further details related to non-GAAP measures and reconciliations can be found under our “Non-GAAP Financial Measures and Estimates” section or in reconciliation tables in this release. |
Reconciliation Schedules (Unaudited) (in millions of dollars, except per share data) |
||||||||
|
Quarterly Period Ended |
|||||||
|
|
|
||||||
|
|
|
||||||
Net income |
$ |
207 |
|
|
$ |
194 |
|
|
Add: other expense |
|
7 |
|
|
|
14 |
|
|
Add: interest expense |
|
70 |
|
|
|
76 |
|
|
Add: income tax expense |
|
52 |
|
|
|
59 |
|
|
Operating income |
$ |
336 |
|
|
$ |
343 |
|
|
|
|
|
|
|||||
Add: restructuring and transaction activities |
|
7 |
|
|
|
4 |
|
|
Add: other non-cash charges |
|
4 |
|
|
|
6 |
|
|
Adjusted operating income (2) |
$ |
347 |
|
|
$ |
353 |
|
|
|
|
|
|
|||||
Add: depreciation |
|
140 |
|
|
|
140 |
|
|
Add: amortization of intangibles |
|
63 |
|
|
|
72 |
|
|
Operating EBITDA (2) |
$ |
550 |
|
|
$ |
565 |
|
|
|
|
|
|
|||||
Cash flow from operating activities |
$ |
359 |
|
|
$ |
274 |
|
|
Net additions to property, plant, and equipment |
|
(191 |
) |
|
|
(155 |
) |
|
Free cash flow (2) |
$ |
168 |
|
|
$ |
119 |
|
|
|
|
|
|
|||||
Net income per diluted share |
$ |
1.58 |
|
|
$ |
1.40 |
|
|
Other expense, net |
|
0.05 |
|
|
|
0.10 |
|
|
Restructuring and transaction activities |
|
0.06 |
|
|
|
0.03 |
|
|
Amortization of intangibles from acquisitions (1) |
|
0.48 |
|
|
|
0.52 |
|
|
Income tax impact on items above |
|
(0.14 |
) |
|
|
(0.16 |
) |
|
Adjusted net income per diluted share (2) |
$ |
2.03 |
|
|
$ |
1.89 |
|
|
Foreign currency and divestitures |
|
|
|
(0.04 |
) |
|||
Comparable adjusted net income per diluted share (2) |
|
|
$ |
1.85 |
|
|||
|
|
|
|
|||||
|
Estimated
|
|
|
|||||
Cash flow from operating activities |
$ |
1,500 |
|
|
|
|||
Net additions to property, plant, and equipment |
|
(750 |
) |
|
|
|||
Free cash flow (2) |
$ |
750 |
|
|
|
|||
|
|
(1) |
Amortization of intangibles from acquisition will be added back for fiscal year 2022 and going forward to better align our calculation of adjusted EPS with peers. |
|
(2) |
Supplemental financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in |
|
|
||
We define “free cash flow” as cash flow from operating activities less net additions to property, plant, and equipment. We believe free cash flow is useful to an investor in evaluating our liquidity because free cash flow and similar measures are widely used by investors, securities analysts, and other interested parties in our industry to measure a company’s liquidity. We also believe free cash flow is useful to an investor in evaluating our liquidity as it can assist in assessing a company’s ability to fund its growth through its generation of cash. |
||
|
||
Adjusted EBITDA is used by our lenders for debt covenant compliance purposes. We also use Adjusted EBITDA, Operating EBITDA, and comparable basis measures, among other measures, to evaluate management performance and in determining performance-based compensation. Adjusted EBITDA and Operating EBITDA and similar measures are widely used by investors, securities analysts, and other interested parties in our industry to measure a company’s performance. We also believe EBITDA and Adjusted net income are useful to an investor in evaluating our performance without regard to revenue and expense recognition, which can vary depending upon accounting methods. |
(BERY-F)
View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005103/en/
Director, Head of Investor Relations
+1 (812) 306 2964
ir@berryglobal.com
Source:
FAQ
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