Berry Global Group has reported its first quarter 2019 results, referred to in the following as the December 2018 quarter.
Image: Berry Global Group has reported first quarter 2019 results. Photo: courtesy of Dominik Gwarek / FreeImages.
First Quarter Highlights
Net sales increased 11 percent to $2 billion
Organic sales growth, which excludes currency and acquisition effects, up 3 percent
Operating income up 8 percent to $176 million
Operating EBITDA up 7 percent to $331 million
Net income per diluted share of $0.66
Adjusted net income per diluted share up 15 percent to $0.77
Commenting on the quarter, Tom Salmon, Chairman and Chief Executive Officer of Berry stated, “I am proud to report we had another quarter of solid financial results as we generated record results for any December quarterly period for most of our primary operating metrics. Net sales increased 11 percent to $2 billion, with organic sales growth of 3 percent.
“Additionally Operating EBITDA was also a quarterly record at $331 million up 7 percent from the prior year and our adjusted net income per diluted share December quarterly record of $0.77 was an increase of 15 percent compared to the prior year quarter.”
“Specifically by segment, our Consumer Packaging division delivered strong organic sales growth of 9 percent in the quarter, which was led by our foodservice products. Within our Health, Hygiene & Specialties division we recorded strong quarterly sales dollar growth of 22 percent as well as a 21 percent improvement in Operating EBITDA, including the impact of the Clopay acquisition.
“Inside our Engineered Materials division, we recorded quarterly sales dollar growth of 3 percent as well as a 7 percent improvement in Operating EBITDA, including the impact of the recently completed acquisition of Laddawn.”
The net sales increase of $196 million from prior year quarter is primarily attributed to acquisition net sales of $158 million and organic sales growth of $49 million, partially offset by an $11 million unfavorable impact from foreign currency changes. The organic sales growth is primarily attributed to increased selling prices of $82 million due to the pass through of higher cost of goods sold, partially offset by a 2 percent volume decline.
The operating income increase of $13 million from prior year quarter is primarily attributed to a $10 million decrease in business integration costs, a $6 million decrease in depreciation and amortization, acquisition operating income of $3 million, and a $3 million impact from improvement in price cost spread. These increases are partially offset by a $4 million unfavorable impact from volume and a $4 million unfavorable impact from foreign currency changes.
Net sales in the Engineered Materials segment increased by $21 million from prior year quarter primarily attributed to acquisition net sales of $35 million, partially offset by an organic sales decline of $13 million. The organic sales decline is primarily attributed to a 3 percent volume decline as the result of strong volumes in the prior year quarter, offset by increased selling prices of $8 million due to the pass through of higher cost of goods sold.
The operating income increase of $6 million from prior year quarter is primarily attributed to a $6 million impact from improvement in price cost spread and a $3 million decrease in depreciation and amortization, partially offset by a negative $3 million impact from volume.
Net sales in the Health, Hygiene & Specialties segment increased by $125 million from prior year quarter primarily attributed to acquisition net sales of $123 million and organic sales growth of $12 million, partially offset by a $10 million unfavorable impact from foreign currency changes. The organic sales growth is primarily attributed to increased selling prices of $39 million due to the pass through of higher cost of goods sold, partially offset by a 5 percent volume decline as a result of general market softness in hygiene and specialties.
The operating income increase of $12 million from the prior year quarter is primarily attributed to a $10 million decrease in business integration costs, a $6 million impact from improvement in price cost spread, acquisition operating income of $3 million, and a $2 million decrease in depreciation and amortization. These increases are partially offset by a negative $5 million impact from volume and a $3 million unfavorable impact from foreign currency changes.
Net sales in the Consumer Packaging segment increased by $50 million from prior year quarter primarily attributed to organic sales growth. The organic sales growth is primarily attributed to increased selling prices of $35 million due to the pass through of higher cost of goods sold and a 3 percent volume improvement.
The operating income decrease of $5 million from prior year quarter is primarily attributed to a negative $9 million impact from under recovery of higher cost of goods sold, partially offset by a favorable $4 million impact from volume.
Our cash flow from operating activities increased by 5 percent to $161 million for the quarter ended December 2018 compared to $153 million in the prior year quarter. Adjusted free cash flow for the last four quarters ended December 2018 was $679 million.
Our total debt less cash and cash equivalents at the end of the December 2018 quarter was $5,444 million. Adjusted EBITDA for the four quarters ended December 29, 2018 was $1,439 million.
In the June 2018 quarter, the Company announced that its Board had unanimously approved a new $500 million share repurchase program. The new share repurchase authorization allows for the repurchase of shares, from time to time, through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, and any other purchase techniques deemed appropriate in accordance with applicable securities laws. The timing and amount of repurchases will depend on market conditions. The share repurchase program has no expiration date. The Company repurchased $54 million of shares outstanding during the December 2018 quarter. At the end of the December 2018 quarter, $411 million of authorized share repurchase remain available to the Company.
Source: Company Press Release