Fourth quarter diluted EPS from continuing operations increased 16.3 percent to $0.57 per share.
Full year 2014 adjusted diluted EPS from continuing operations increased 10.0 percent to $2.30 per share, in line with management's guidance.
Net sales increased 4.2 percent in the fourth quarter and 2.1 percent for the full year, excluding the impact of currency translation, acquisitions, and divestitures.
In the U.S. Packaging segment, adjusted operating profit as a percentage of net sales increased to 13.1 percent for the full year.
In the Global Packaging segment, operating profit as a percentage of net sales increased to 7.6 percent for the full year, reflecting improved operating performance in the second half of 2014.
Bemis repurchased 3.8 million shares in 2014.
Management's outlook for 2015 is as follows:
Total year adjusted diluted earnings per share is expected to be in the range of $2.52 to $2.67;
Capital expenditures are expected to be in the range of $185 to $200 million.
Bemis Company, Inc. (NYSE:BMS) reported fourth quarter 2014 diluted earnings per share from continuing operations of $0.57 per share, compared to $0.49 per share for the same quarter of 2013.
For the full year 2014, the Company reported diluted earnings per share from continuing operations of $2.36 compared to $1.85 per share for the full year 2013. Excluding the effect of facility consolidation costs and transaction-related gains detailed in the attached schedule, "Reconciliation of Non-GAAP Earnings Per Share," adjusted diluted earnings per share from continuing operations would have been $2.30 in 2014 and $2.09 in 2013. Net sales from continuing operations totaled $4.3 billion in 2014. Excluding the impact of currency, acquisitions, and divestitures, net sales for 2014 would have increased by 2.1 percent, primarily reflecting the favorable impact of price and mix.
"This has been a pivotal year for Bemis Company as we shifted to a growth focus," said William F. Austen, Bemis Company's President and Chief Executive Officer. "In our U.S. Packaging segment, we are commercializing new product innovations and expanding capacity to meet the needs of our growing target end markets. Improving performance in our Global Packaging segment demonstrates that our growth strategy is working. Higher profit margins in this segment were driven by increased unit sales in our target end markets around the world. As we enter 2015, I am confident that our commitment to quality, service, and the success of our customers will deliver improving financial performance well into the future."
BUSINESS SEGMENT RESULTS
U.S. Packaging
U.S. Packaging net sales of $2.9 billion for 2014 represent a decrease of 4.2 percent, compared to the full year 2013. The first quarter 2014 divestiture of the Paper Packaging Division reduced sales by 5.2 percent. Excluding the impact of divestitures, net sales increased by 1.0 percent, reflecting an increase in price and mix of approximately 3 percent, partially offset by lower unit volumes.
U.S. Packaging operating profit for 2014 was $375.8 million, or 13.1 percent of net sales, compared to $337.9 million, or 11.3 percent of net sales, in 2013. Facility consolidation program costs impacted results during 2013. Excluding these costs, segment adjusted operating profit for 2013 would have been $382.9 million, or 12.8 percent of net sales. (See attached schedule: "Reconciliation of Non-GAAP Operating Profit.") As compared to the prior year, 2014 operating profit results reflect the benefit of sales mix improvements and the adverse impact of costs and manufacturing inefficiencies related to the commercialization of new business.
Global Packaging
Global Packaging net sales of $1.5 billion for 2014 were consistent with the prior year. Currency translation decreased net sales by 7.0 percent, primarily driven by currencies in Latin America. The 2013 acquisition of an extrusion platform in Foshan, China increased net sales by 2.4 percent. Excluding the impact of currency translation and the acquisition, net sales increased by 4.0 percent, reflecting an increase in price and mix of approximately 5 percent, partially offset by lower unit sales volumes. Lower overall unit volumes in 2014 reflect soft demand for food packaging in the first half of the year, substantially offset by volume growth in the second half of the year. Medical device and pharmaceutical packaging volumes grew throughout 2014.
Global Packaging operating profit for 2014 was $113.3 million, or 7.6 percent of net sales, compared to $106.4 million, or 7.1 percent of net sales, in 2013. The net effect of currency translation decreased operating profit during 2014 by $6.4 million. Margin improvement in this segment reflects the favorable impact of increased sales of value-added packaging for medical device, pharmaceutical, and perishable food applications.
DISCONTINUED OPERATIONS
On September 8, 2014, the Company entered into an agreement to sell its Pressure Sensitive Materials business segment. The transaction closed during November 2014. In connection with this transaction, management recorded a $44.7 million non-cash goodwill impairment charge. The operating results of this segment and the goodwill impairment charge are reported as discontinued operations.
CAPITAL STRUCTURE AND CASH FLOW
Total company net debt to adjusted EBITDA was 2.1 times at December 31, 2014, slightly above the Company's target ratio of 2.0 times. Net debt is defined as total debt less cash, and adjusted EBITDA is defined as the last twelve months adjusted total company operating income plus depreciation and amortization.
Cash flow from operations for 2014 was $248.1 million, compared to $373.2 million for 2013, reflecting high levels of working capital associated with sales growth initiatives. New product commercialization and strong customer demand for value-added products resulted in higher inventory and accounts receivable balances.
Capital expenditures totaled $185.2 million for the full year 2014, reflecting increased investment in new capacity to support growth initiatives and productivity improvements.
In 2014, Bemis repurchased 3.8 million shares, for a total of $152.1 million. At December 31, 2014, the remaining Board authorization for the repurchase of Bemis common stock totaled 6.7 million shares.
On August 1, 2014, bonds totaling $400 million matured. Management refinanced these notes with lower interest rate debt, comprised of a $200 million bank term loan that matures in 2022 and $200 million of commercial paper.
2015 OUTLOOK
Commenting on the year ahead, Austen stated, "In 2015, we expect our growth initiatives to deliver continued performance improvement across our business. We have aligned our capital investments and incentive compensation programs to achieve our targeted performance metrics."
Management expects adjusted diluted earnings per share to be in the range of $2.52 to $2.67 for the full year 2015, which includes the benefit of lower interest expense, partially offset by increased pension expense. This includes also an anticipated effective income tax rate for 2015 of approximately 34 percent.
Management expects capital expenditures for 2015 to be in the range of $185 to $200 million, which will support increased customer demand for value-added products and further strengthen Bemis' competitive position.
