SPY380.36-1.97 -0.52%
DIA309.45-4.53 -1.44%
IXIC13,192.35+72.96 0.56%

Press Release: Berry Global Group, Inc. Reports Strong First Quarter 2021 Results; Raises Fiscal Year 2021 Earnings Guidance

· 02/05/2021 07:30
December Quarterly Extra Shipping Comparable (organic Volumes: As Reported Days volume growth) ------------- --------------- -------------------- Consumer Packaging -- Int'l 4% - 4% Consumer Packaging -- N.A. 13% 5% 8% Health, Hygiene & Specialties 21% 6% 15% Engineered Materials 7% 5% 2% ------ ---- ----- ------- ------ ----------- Consolidated Total 11% 4% 7% ====== ==== ===== ======= ====== ===========First Quarter Highlights (all comparisons made to the December 2019 quarter) Net sales of $3.1 billion; 7 percent organic volume growth Operating income up 53 percent to $304 million Operating EBITDA up 20 percent to $539 million Net income per diluted share up 174 percent to $0.96 Adjusted net income per diluted share increase of 100 percent to $1.12 Increased fiscal 2021 organic volume growth assumption by 2 percent, now targeting 4 percent Raised fiscal 2021 operating EBITDA guidance range by $25 million to $2.175 - $2.225 billion Reaffirmed cash flow from operations and free cash flow guidanceEVANSVILLE, Ind.--(BUSINESS WIRE)--February 05, 2021--

Berry Global Group, Inc. Reports Strong First Quarter 2021 Results; Raises Fiscal Year 2021 Earnings Guidance

Berry Global Group, Inc. (NYSE:BERY), a leading supplier of sustainable packaging solutions for consumer goods and industrial products, today reported its first fiscal quarter 2021 results, referred to in the following as the December 2020 quarter.

Berry's Chairman and CEO Tom Salmon said, "Berry's fiscal 2021 is off to an exceptional start with record first quarter financial results exceeding our expectations. Consumer demand for our products remains consistent and certain markets which previously experienced COVID-19 headwinds are rebounding quicker than we expected. All segments delivered strong volume growth, collectively finishing the quarter with 7 percent organic volume growth, while operating EBITDA increased 20 percent in the quarter. The organically driven outperformance in this first fiscal quarter gives us confidence to raise our fiscal year 2021 outlooks for both operating EBITDA and organic volume growth.

"Our businesses, across the globe, are clearly capitalizing on our strategy to drive profitable and sustainable organic volume growth. The continued positive momentum from our investments in areas such as health and wellness, food safety, and e-commerce along with the focus on growing our emerging market exposure, provide us the path to realize long-term consistent volume growth. Couple these drivers with our numerous efforts to drive more sustainable packaging and you have a lot to be excited about in the upcoming years here at Berry.

"With normalized free cash flow of over $1 billion, we have a clear line-of-site to leverage in the 3.8 to 3.9 times range by the end of fiscal 2021. Once within our targeted leverage range of 3.0 to 3.9 times, our consistent and growing cash flow provides substantial capacity to create shareholder value with a balanced capital allocation approach that includes: reinvesting in the business to support continued organic growth, returning capital to shareholders, pursuing bolt-on acquisitions and further debt reductions while staying within our committed range."

December 2020 Quarter Results

Please note that the December 2020 quarter contained additional shipping days for our U.S. based businesses compared to Berry's prior year period. Our discussion of organic volume growth below will exclude these additional shipping days. The table provides a summary of volumes for the December 2020 quarter:

Consolidated Overview

The net sales growth is primarily attributed to organic volume growth of 7 percent, a $50 million favorable impact from foreign currency changes and a $112 million benefit from extra shipping days in the quarter, partially offset by prior quarter divestiture sales of $15 million. The organic volume growth was primarily due to growth investments, modest recovery of certain markets that had previously been facing pandemic headwinds, and higher demand in our advantaged health and hygiene products as the result of COVID-19.

The operating income increase is primarily attributed to a $46 million increase from the organic volume growth, a $17 million favorable impact from price cost spread including synergies, a $12 million decrease in business integration expense, a $7 million gain on the divested business, a $7 million favorable impact from foreign currency changes, and a $19 million benefit from extra shipping days in the quarter.

Consumer Packaging - International

The net sales growth is primarily attributed to organic volume growth of 4 percent, and a $44 million favorable impact from foreign currency changes partially offset by lower selling prices of $28 million.

The operating income increase is primarily attributed to a $9 million decrease in selling, general, and administrative expense, a $7 million increase from the organic volume growth, a $6 million favorable impact from price cost spread, a $6 million decrease in business integration expense, and a $6 million favorable impact from foreign currency.

Consumer Packaging - North America

The net sales growth is primarily attributed to organic volume growth of 8 percent and a $34 million benefit from extra shipping days in the quarter. The organic volume growth was primarily due to continued strength in closures, bottles, and containers.

The operating income increase is primarily attributed to a $13 million increase from the organic volume growth and a $6 million benefit from extra shipping days in the quarter, partially offset by a $5 million increase in selling, general, and administrative expense.

Health, Hygiene, & Specialties

The net sales growth in the Health, Hygiene & Specialties segment is primarily attributed to organic volume growth of 15 percent, increased selling prices of $7 million and a $36 million benefit from extra shipping days in the quarter. The organic volume growth was primarily due to growth investments and higher demand in our advantaged health and hygiene products as the result of COVID-19.

The operating income increase is primarily attributed to a $24 million impact from the organic volume growth, a $16 million favorable impact from price cost spread, and a $7 million benefit from extra shipping days in the quarter.

Engineered Materials

The net sales growth in the Engineered Materials segment is primarily attributed to increased selling prices of $14 million, organic volume growth of 2 percent, a $7 million favorable impact from foreign currency, and a $37 million benefit from extra shipping days in the quarter, partially offset by prior quarter divestiture sales of $11 million.

The operating income increase is primarily attributed to a $7 million gain on the divested business and a $5 million benefit from extra shipping days in the current quarter, partially offset by a $5 million negative impact from price cost spread.

Cash Flow

Our cash flow from operating activities increased by 44 percent to $315 million for the December 2020 quarter compared to $218 million in the prior year quarter. Free cash flow for the December 2020 quarter was $153 million, an increase of 119 percent compared to $70 million in the prior year quarter. The Company's cash flow from operating activities and free cash flow for the four quarters ended January 2, 2021, were $1,627 million and $1,030 million, respectively.

Balance Sheet and Liquidity

Our total debt less cash and cash equivalents at the end of the December 2020 quarter was $9,234 million. Adjusted EBITDA for the four quarters ended January 2, 2021, was $2,256 million. Our financial profile remains solid, as we have a strong liquidity position with $847 million of cash at the end of the quarter as well as an undrawn $850 million asset-based line of credit representing nearly $1.7 billion of liquidity.

Bond Offering and Note Redemptions

In December 2020, we issued $750 million aggregate principal amount of 1.57% first priority senior secured notes due 2026, the proceeds from which were used to prepay a portion of our term loan debt. Also in December 2020, we elected to redeem $100 million aggregate principal amount of our 5.125% Second Priority Senior Secured Notes due 2023, which were redeemed following the end of the December 2020 quarter.

Fiscal 2021 Guidance

We have seen significant cost increases in our primary raw material, resin, along with some modest inflation in other raw material and other costs over the past several months including anticipated February increases. With the strong volume growth momentum in the businesses along with our efforts to improve the timing lag of the pass through of inflation in our customer contracts, we fully intend on passing these transitory increases through. Our updated guidance includes an incremental timing lag of $50 million over the next three quarters related to this incremental inflation. In spite of these challenges, when compared to our initial expectations, given the stronger beginning to the fiscal year and quicker recovery of markets that have been negatively impacted by COVID-19, we are increasing the range of operating EBITDA by $25 million to the new range of $2.175 to $2.225 billion for fiscal year 2021. Furthermore, we are increasing our organic volume growth assumption by 2 percent, and now anticipate volume growth of 4 percent, which is supported by our robust and growing pipeline, increased level of capital expenditures, and the positive trends and momentum we are seeing in each of our businesses. Free cash flow will remain in the range of $875 to $975 million. The range of free cash flow includes $1.525 to $1.625 billion of cash flow from operations,

(MORE TO FOLLOW) Dow Jones Newswires

February 05, 2021 07:30 ET (12:30 GMT)