Tuesday, Bemis Co. Inc. (BMS), a supplier of flexible packaging and pressure sensitive materials, reported a decline in earnings for the third quarter as sales fell 8.7%. The company provided fourth quarter forecast and lifted its earnings outlook for fiscal 2009 above Street view.
For the quarter, net income attributable to Bemis Company declined to $35.84 million from $44.26 million in the corresponding period last year. Earnings decreased to $0.33 per share from $0.43 per share in the same period last year. Net income declined to $38.44 million from $46.21 million in the same period last year. Excluding the effect of acquisition related charges and financing, and a gain on sale of an asset, earnings per share were $0.48 compared to $0.43 per share a year earlier.
On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.
The current quarter includes $16 million or $0.09 per share of expenses associated with the planned acquisition of Alcan Packaging Food Americas announced on July 5, 2009. Furthermore, results for the current quarter were reduced by a total of $0.08 per share related to the impact of acquisition financing raised through the issuance of public bonds and common stock during the quarter. These added costs were partially offset by a $3.6 million gain on the sale of property which added $0.02 per share to results for the quarter.
Bemis said results for the third quarter of 2008 have been recast to reflect the impact of FSAB guidance, which requires unvested share based payment awards that contain rights to receive non-forfeitable dividends to be included in the calculation of earnings per share, effective January 1, 2009. The impact of this modification is a $0.01 per share decrease in earnings for the third quarter of 2008
Net sales were $898.93 million, down 8.7% from $984.26 million a year earlier. Seven Street analysts expected the company to report sales of $908.99 million for the quarter.
Currency fluctuations reduced net sales by 3.6% compared to the third quarter of 2008. South American rigid packaging, acquired in June 2009 contributed 1.9% to sales during the quarter. The remaining 7% decline in net sales reflects lower unit volume and selling prices offset by improved sales mix compared to the prior year quarter.
Flexible packaging business segment net sales were $764.1 million, down 7.5% from $826.4 million in the year-ago quarter. Operating profit was $106 million, up from $82.4 million a year earlier.
Net sales from the pressure sensitive materials business segment were $134.8 million, down 14.6% from net sales of $157.9 million in the year-ago quarter. Operating profit slid to $5.4 million, from $9 million in the same period last year.
On July 5, 2009, Bemis agreed to acquire the Food Americas operations of Alcan Packaging, a business unit of Rio Tinto Plc (RIO.L, RIO.AX), for $1.2 billion. The transaction is expected to be approved by the end of 2009. The majority of the financing for this transaction was completed during the third quarter of 2009 through the issuance of $800 million of public bonds and 8.2 million common shares issued in a secondary public stock offering. The remaining cash purchase price is expected to be financed in the commercial paper market at the time of closing, the company said.
For the nine-month period, net income attributable to Bemis Company declined to $121.07 million from $133 million in the same period last year. Earnings declined to $1.15 per share from $1.29 per share a year earlier. Net income fell to $125.5 million from $137.8 million in the comparable period last year. Net sales declined to $2.6 billion from $2.9 billion in the year-ago period.
Looking ahead to the fourth quarter the company expects earnings to be in the range of $0.40 to $0.45 per share. Currently, analysts expects the company to report earnings of $0.34 per share for the quarter.
The company also revised its forecast upward for the full year 2009 to $1.81 to $1.86 per share, from $1.68 to $1.75 per share reflecting the improved operating performance for the total year 2009. Presently, analysts expect the company to report earnings of $1.65 per share for 2009.
Bemis said to provide a direct comparison of 2009 operating results to those of 2008, the guidance does not reflect the impact of the sale of the property in Brazil, severance charges, acquisition related costs, and interest expense or shares issued in connection with the pending acquisition of the Alcan Packaging Food Americas business.
BMS is currently up $1.45 or 5.63% and trades at $27.20.
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